T 

N2135 
*625L 
1910 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


LUMBER 

LEGAL  OPINIONS 


1910 


PUBLISHED    BY 

NATIONAL     WHOLESALE     LUMBER 
DEALERS   ASSOCIATION 

66   BROADWAY,       -        NEW   YORK 


lc\\D 

OFFICERS   1910-1911 


President 

First  Vice-President 

Second  Vice-President 

Treasurer     - 

Secretary 


-   ROBERT  W.  HIGBIE 

FRED  R.  BABCOCK 

FRANKLIN  E.  PARKER 

-   FRED'K  W.  COLE 

E.  F.  PERRY 


BOARD  OF  TRUSTEES 

Terms   «xpire   in  1911 


LEWIS  DILL 

C.  H.  PRESCOTT,  Jr.     - 

G.  F.  CRAIG 

A.  L.  STONE       - 

W.  W.  KNIGHT 

W.  E.  LITCHFIELD      - 

W.  W.  REILLEY      - 


Baltimore,  Md 

Cleveland,  O. 
Philadelphia,  Pa. 

Cleveland,  O. 
Indianapolis,  Ind. 

Boston,  Mass. 

Buffalo,  N.  Y. 


Terms  expire  in  1912 


R.  D.  BAKER 

G.  C.  EDWARDS 

F.  W.  COLE 

R.  H.  DOWNMAN 

F.  E.  PARKER 

R.  W.  HIGBIE     - 

HORTON  CORWIN,  Jr. 


Pittsburg,  Pa. 

Ottawa,  Ont. 

New  York  City 

New  Orleans,  La. 

Saginaw,  Mich. 

New  York  City 

Edenton,  N.  C. 


Terms  expire  in  1913 


F.  R.  BABCOCK 
N.  H.  WALCOTT 
T.  J.  MOFFETT 
F.  S.  UNDERHILL 
L.  L.  EARTH    - 
J.  V.  STJMSON 
W.  A.  GILCHRIST 


Pittsburg,  Pa. 

Providence,  R.  I. 

Cincinnati,  O. 

Philadelphia,  Pa. 

Chicago,  111. 

Huntingburg,  Ind. 

Memphis,  Tenn. 


v 

. 


PREFACE 

In  presenting  "Lumber  Legal  Opinions"  to  our  members  and  to 
some  of  our  friends  whom  we  particularly  desire  to  become  mem- 
bers of  our  Association,  not  only  for  the  good  their  co-operation  will 
do  us,  but  for  their  own  benefit  as  well,  we  desire  to  say  that  this 
compilation  is  based  upon  the  practical  working  out  of  specific  cases 
for  our  members  during  the  past  few  years.  An  examination  will, 
we  think,  prove  the  work  to  be  practical  and  dependable,  and  gen- 
erally to  express  good  common  sense,  and  consequently  good  law. 
You  will,  we  hope,  find  it  worth  your  careful  study  and  guidance. 
In  some  instances  the  opinions  may  be  affected  by  court  decisions 
of  the  respective  States;  some  of  these  decisions  are  specifically 
referred  to,  but,  as  a  rule,  it  has  been  our  aim  to  secure  opinions 
covering  a  general  situation. 

This  gives  us  an  opportunity  to  remind  you  of  the  special 
work  which  this  Association  is  constantly  undertaking  for  its  mem- 
bers and  especially  that  it  is  worthy  of  your  earnest  co-operation 
and  special  effort  to  bring  in  new  members,  so  that  the  influence 
of  the  organization  may  be  enlarged  and  made  in  every  way 
worthy  of  its  name. 

The  Charter  defines  the  Purpose  of  the  Association  to  be  "to 
protect  the  members  against  unbusinesslike  methods  in  the  whole- 

sale and  retail  trade;  to  foster  such  trade  and  corn- 
Purpose  merce;  to  reform  abuses  in  such  trade  or  business; 

of  the  to  secure  freedom  from  unjust  or  unlawful 

Association  exactions;  to  diffuse  accurate  information  among 

its  members  as  to  the  standing  of  merchants  and 
others  by  and  with  whom  said  trade  or  business  is  conducted,  and 
as  to  other  matters  to  produce  uniformity  and  certainty  in  the  cus- 
toms and  usages  of  said  trade  and  of  those  engaged  therein;  to 
settle  differences  between  its  members,  and  to  promote  a  more 
large  and  friendly  intercourse  between  them." 

The  Charter  and  By-Laws  of  the  Association  defines  the  duty  of 
this  Bureau  to  be  as  follows:  "To  diffuse  accurate  information 

as  to  the  standing  of  merchants."  There  are  in  the 
In^o^ation  records  of  this  Bureau  at  the  present  time  28,000 
or  Credit  reports  showing  the  financial  condition  of  an  equal 

Department  number  of  buyers  of  lumber.  In  addition  to  these 

financial  statements  all  of  these  buyers  of  lumber 
are  rated  by  the  Bureau  as  to  their  credit  standing  as  well.  It  is 
the  unanimous  opinion  of  our  members  who  use  this  Bureau  that 


the  reports  are  superior  to  those  of  any  other  mercantile  agency 
or  other  source  of  information.  The  Bureau  makes  a  specialty  of 
securing  reports  only  on  lumber  buyers  or  users,  and  it  therefore 
furnishes  more  complete  and  reliable  reports  as  to  moral  and  finan- 
cial standing  and  business  methods  than  any  other  agency.  A  sys- 
tem is  also  a  part  of  the  Bureau  whereby  important  information  is 
sent  to  each  subscriber  without  the  subscriber  making  special  request 
therefor ;  in  other  words,  it  is  the  aim  of  the  Bureau  to  keep  its  sub- 
scribers fully  and  promptly  advised  of  all  important  business 
changes. 

In  connection  with  and  as  a  part  of  the  Bureau  of  Information 
there  has  been  established  a  legal  and  collection  department.  This 

department  handles  commercial  claims,  past  due 
Legal  and  accounts,  etc.,  sent  to  it  with  promptness  and  at  a 
Collection  minimum  cost  when  compared  with  the  usual 
Department  methods  employed  by  attorneys  and  the  courts ;  also 

has  on  file  much  information,  including  legal  opin- 
ions and  court  decisions  which  are  furnished  upon  request  without 
charge. 

The  Railroad  and  Transportation  Committee  through  its  Bureau 
is  in  a  position  to  be  of  the  greatest  service  to  our  members,  because 

of  the  intimate  knowledge  which  our  Traffic  Man- 
Railroad  ager  has  of  all  matters  that  have  to  do  with  our 
*nd  relations  with  the  railroads, 
tion  Bureau  Information  and  assistance  covering  a  wide  range 

of  transportation  subjects  is  being  constantly  ren- 
dered. There  are  also  on  file  complete  lumber  tariffs  which  are 
kept  up  to  date,  and  this  enables  our  members  to  obtain  correct 
information  as  to  rates,  routing,  etc.  Upon  request,  shipments  are 
traced  and  prompt  deliveries  effected.  The  above  services  are 
furnished  to  our  members  entirely  free  of  charge. 

This  Bureau  also  investigates  and  collects  claims  for  loss  or 
damage  in  transit,  overcharges  in  rates,  weight,  misrouting,  etc. 
For  these  services  a  nominal  charge  is  made  based  on  the  actual 
amount  collected.  The  manager  of  this  Bureau  has  had  years  of 
experience  and  possesses  intimate  knowledge  of  the  methods  pur- 
sued by  the  various  claim  departments  of  the  railroads  and  he  is 
therefore  in  a  position  promptly  to  collect  any  just  claims  and  fre- 
quently has  been  able  to  collect  claims  which  our  members  have  been 
unable  to  collect  themselves.  In  this  connection  it  may  be  well  to 
state  that  all  shippers  of  lumber  are  entitled  to  free  allowances  in 
weight  of  five  hundred  pounds  for  car  stakes  used  on  flat  and  gon- 


dola  cars,  and  this  Bureau  has  secured  many  refunds  on  past  ship- 
ments for  members  who  have  not  been  allowed  this  free  weight. 
The  Bureau  is  also  in  a  position  to  compel  the  railroads  not  now 
making  the  allowances,  to  do  so. 

The  By-Laws  define  the  duties  of  the  Arbitration  Committee 
to  be  "to  settle  differences  between  our  members."  The  services 

of  this  committee  are  at  the  disposal  of  our  members 
Arbitra-  at  the  actual  cost  of  the  expenses  of  three  selected 

tion  men  from  among  the  members  of  this  committee 

who  thoroughly  understand  the  customs  of  the  lum- 
ber trade.  Any  member  who  avails  himself  of  the  services  of  this 
committee  consequently  obtains  at  an  actual  cost  the  services  of  a 
jury  of  experts,  with  the  result  that  differences  are  settled  fairly, 
equitably  and  promptly  and  without  any  annoyances  and  undue 
expenses. 

"To  reform  abuses"  and  "to  secure  freedom  from  unjust  or 

unlawful   exactions"   is  jointly  the  work  of   several   Committees. 

For  freedom  from  unjust  and  burdensome  laws  and 

for  laws  granting  us  security  and  reasonable  oppor- 

Legislation         tunity  in  the  conduct  of  our  business,  we  look  to 

the    Legislation    Committee,    whose    duty    it    is    to 

scrutinize  acts  affecting  the  trade,  to  oppose  those 

which  oppress,  and  to  favor  and  forward  those  which  assist. 

"To  foster  such  trade  and  commerce"  by  perpetuating  the  raw 
material  which  forms  the  basis  of  all  lumber  business,  we  have 

our  Forestry  Committee.  The  people  of  this  coun- 
Forestry  *rv>  w^h  its  tremendous  sources  of  timber  supply, 

and  must  be  educated  to  grasp  the  possibility  of  a  future 

Conservation  famine,  and  needful  legislation  must  be  enacted  to 

reduce  the  problem  of  reforestation  to  a  practical 
business  proposition  before  the  scarcity  of  timber  shall  enhance  the 
values  of  stumpage  to  the  point  of  placing  trees  as  a  crop  in  the 
same  class  with  grain  and  cotton.  The  Advisory  Forestry  Com- 
mittee links  our  Association  with  the  country  at  large  in  this  move- 
ment. 

The  services  performed  by  the  members  of  these  committees 
in  past  years  have  most  fully  justified  their  existence  in  the  reduc- 
tion   which    has    been    obtained    not    only    for    our 
Fire  and  members,  but  for  all  lumbermen  both  in  fire  insuring 

Insurance  companies  as  well  as  in  marine  insuring  companies. 

These  savings  amount  annually  to  a  sum  which  is 
estimated  at  more  than  one  million  dollars  in  premiums. 


Our  Association  stands  for  not  only  a  national  but  an  inter- 
national set  of  rules  to  govern  the  grading  and  inspection  of  hard- 
wood lumber.     In  all   lines  of   business  nothing  is 
Hardwood          more   desirable  and  necessary  than  uniformity.     It 
Inspection          is  the  aim  of  the  Hardwood  Inspection  Committee 
to  secure  the  adoption  of  a  reasonable  and  universal 
set  of  rules  for  the  inspection  of  hardwood  lumber. 

The  Active  Management  of  the  Association  is  in  the  hands  of 
a  board  of  twenty-one  trustees,  operating  with  the 
Manage-  Officers  and  the  Executive  Committee,  through  the 

Secretary  and  his  assistants. 

The  offices  of  the  Association  are  at  66  Broadway,  New  York, 

centrally  located  in  the  business  section  of  the  city. 

Members  have   the  unrestricted  privilege   of   using 

these  offices  as  the  headquarters  for  receiving  mail 

and  telegrams,  and  for  business  conferences. 

The   four   hundred   Lumbermen   who  are   members   are   ready 
and  willing  to  testify  to  the  advantages  to  be  derived  from  con- 
nection with  this  Association.    Coming  from  28  States 
Member-  an(j    Canada,    they    are    qualified    by    numbers    and 

ability  to  cope  with  all  questions  affecting  the  manu- 
facture and  wholesale  distribution  of  lumber. 

Membership  in  our  Association  is  restricted  to  legitimate  manu- 
facturers of  lumber  and  wholesale  dealers  in  lumber  who  are  in 
good  standing  in  the  trade. 

There  is  no  initiation  fee.  The  annual  dues  are  $50.00,  with 
a  charge  of  $50.00  additional  to  those  who  desire  the  benefits  of  the 
Bureau  of  Information.  The  Collection  Department  and  Trans- 
portation Bureau  are  open  to  all  members  without  charge  other 
than  the  very  moderate  fees  scheduled  for  actual  work  performed. 


These  opinions  and  abstracts  were  compiled,  and  arranged  under  the 
supervision  of  the  LEGAL  DEPARTMENT,  BUREAU  OF  INFORMATION, 
W.  W.  Schupner,  Department  Manager. 


INDEX 

The  cross  index  is  arranged  so  as  to  bring  out  the  several  points 
in  each  opinion  or  extract.  The  number  at  the  left,  following  each 
opinion  or  extract,  indicates  the  number  of  such  opinion  or  extract 
referred  to  in  the  index.  The  first  number  after  the  subject  gives 
the  number  of  the  opinion  and  the  second  the  page  number,  for 
example :  after  "acceptance  of  checks  sent  in  full  settlement"  appear 
18-21,  denoting  that  the  information  can  be  obtained  from  opinion 
18  on  page  21.  The  other  figures  after  the  same  subject  indicate  the 
other  opinions  and  pages  where  similar  information  is  given. 


First  number  gives  number  of  opinion ;  second  number  gives  page  number. 
Agent. 

Authority  of  salesman  to  bind  principal 35~36 

Carrier  as  agent — see  common  carriers 

License  in  New  York  City 3-17 

May  receive  notice  for  principal 88-74 

See  also  certificate  to  do  business. 

Acceptance  of 

checks  sent  in  full  settlement  18-21,  20-28,  51-49,  66-60, 

80-68,  95-77 

delayed  shipments  avoids  claim  for  delay 87-73 

draft  does  not  avoid  claim  for  inferior  lumber 92-76 

less  than  invoice  price 109-89 

offer  constitutes  valid  contract 72~65,  96-79 

order  through  salesman,  when  it  is  complete 96-78 

shipment  affected  by  statute  (New  Jersey) 81-69 

shipment  affected  by  warranty 62-57,  IO2~83,  108-89 

shipment  unless  promptly  rejected 62-57 

shipment  validates  verbal  contract 65-59,  86-72 

shipment  when  it  is  all  or  partially  used.  .  .34-36,  90-75,  102-83 

shipment  when  it  is  retained 6-17,  31-48 

shipment  when  it  is  used  may  depend  on  a  private  cus- 
tom   90-75 

Acceptance  necessary  to  make  valid  contract 72~65,  96-79 

Accord  and  satisfaction 18-21,  20-28,  51-49,  66-60,  80-68,  95-78 

Accounting  by  executor 23-26 

Accounts  stated — what  does  it  consist  of  and  what  advantage.  101-82 

Assignment  for  creditors  voided  by  bankruptcy 14-22 

Assignment  of  account  by  foreign  corporation  (New  York)  .  .  63-58 


First  number  gives  number  of  opinion;  second  number  gives  page  number. 

Banking. 

Certification  of  check  releases  maker 45~43>  104-85 

Liability  of  bank  for  failure  to  give  notice  of  protest  to 

endorser  of  note 99~8i 

Protest  not  always  necessary S2~S° 

Bankruptcy. 

Avoids  assignment  of  creditors 14-22 

Discharge  not  prevented  by  giving  bad  check 4J-39 

Discharge,  what  will  prevent  it 97~79 

Bill  of  Lading 

in  name  of  buyer  may  not  release  seller 53'S1 

may  be  required  for  surrender  of  shipment 29-34 

stipulation  as  to  delivery 1 1-20 

stipulation  as  to  notice  of  arrival 25-31 

to  order  retains  title 7062 

Breach  of  contract — see  contracts. 

Buyer's  position  when  lumber  offered  is  not  as  per  contract.  . .   37-33 

Cancelling  contract  when  one  party  guilty  of  breach.  . .  .5-14, 

47-44,  67-61,  71-64 
Cancelling  order  by  purchaser  before   accepted  by   seller's 

home  office 96-79 

Cancelling  order  for  non-delivery  or  delay 43~4i,  84-71 

Carload  of  lumber  must  all  be  in  accordance  with  order  to 

fulfill  contract 76-66 

Certification  of  check  binds  bank  and  releases  maker.  .45-43,  104-85 
Certificate  for  individual  to  do  business  in  New  Jersey  or 

New  York 1022 

Certificate  to  do  Business. 


Indiana 106-86     New  York.  ..17-19,  26-32, 

Kentucky 106-87  63-57,  106-88 

Maryland 55-52     Ohio 106-87 

Michigan    106-88     Pennsylvania   19-24 

Mississippi  106-87     Tennessee 106-87 

New  Jersey 17-18,  64-58     West  Virginia 106-86 

Change  in  original  order  no  excuse  for  refusing  shipment.  . .      1-13 

Checks  sent  in  full  settlement,  etc 18-21,  20-28,  51-49, 

66-60,  80-68,  95-77 

Common  Carriers. 

Agent  for  buyer 33-77,  53-51,  70-62,  88-74 

Agent  for  seller 22-28,  37-33,  70-62,  88-74 

Can  insist  upon  acceptance  of  delayed  delivery. . .  .13-47,  56-53 
Claim  for  loss  or  damage 13-47.  46-42,  56-53>  59-54,  73~65 


First  number  gives  number  of  opinion;  second  number  gives  page  number. 

Liability  as  warehouseman 8-16,  48-44 

Liability  for  delay I3~47 

Liability  for  delivery  without  surrender  of  Bill  of  Lading, 

29-34,  58-54 

May  return  rejected  shipment  to  consignor.  ...    58-54 

Must  deliver  shipment  as  directed 11-20,  61-56 

Not  always  compelled  to  notify  consignor  that  shipment 

is  rejected  by  consignee 61-56 

Not  bound  to  act  as  intermediary 58-54,  61-56 

Notice  to,  when  loading  complete 8-15 

Obligation  to  send  notice  of  arrival.  .8-16,  25-31,  28-33,  48-44 
Should  pay  value  at  destination  for  lumber  lost.  . .  .59-55,  73-65 

Stopping  shipments  in  transit 27-29,  79-68,  105-85 

When  can  charge  demurrage 25-31 

When  liability  begins  and  ends 8-16,  48-44 

Conditional  clauses  on  letter-heads,  orders,  etc.  .24-27,  110-48, 

50-46,  82-70 

Confirmation  of  order  by  home  office 65-59,  96-78 

Confirmation  as  to  time  of  shipment 36-35 

Contract. 

Acceptance  of  offer  constitutes  valid  contract 72-65,  96-79 

Against  liability  for  delay  in  shipping 24-26 

Breach  for  failure  to  make  good  delivery 6-18,  37-33 

Breach  for  non-delivery 22-28,  30-30,  39-38,  43-41,  84-71 

Conditions  must  all  be  part  of  contract.  . .  .24-27,  50-46, 

110-48,  82-70 

Incomplete  when  only  part  of  car  as  per  order 76-66 

May  be  cancelled  when  one  party  guilty  of  breach.  .5-14, 

47-44,  67-61,  71-64 

May  be  void  if  a  mistake  in  it  is  obvious 72-65 

Should  be  in  writing  and  signed 65-59 

Valid  by  acceptance  of  offer 72-65,  96-79 

Conveyance  in  F.  O.  B.  shipment 42-40 

Corporations  (foreign)  see  certificate  to  do  business. 

Credit  cannot  be  demanded  when  business  transferred 40-39 

Credit  must  be  kept  good ..  30-30,  39-38,  47-44,  67-60,  71-64, 

79-68,  91-75 

Custom — private  and  general — as  to  using  a  shipment 9°"74 

Damage  claim  against  carrier,  amount  of  claim. .  13-47,  46-42, 

S6-53>  59-54,  73-65 

Damage  in  transit,  who  responsible 8-15,  54-51 

Delay  beyond  shipper's  control 50-46,  84-71 

Delay  by  carrier,  liability  for I3~47 

Delay  in  shipment,  liability  for 24-27,  50-46,  84-71 

Delayed  delivery,  acceptance  of,  avoids  claims  for  damages .  . .  87-73 

Delayed  delivery  by  carrier  should  be  accepted I3"47>  56-53 

Delayed  delivery  need  not  be  accepted  as  fulfilling  contract, 

84-71,  87-73 


First  number  gives  number  of  opinion;  second  number  gives  page  number. 

Delivery. 

Delayed,  liability  for 24-27,  50-46,  84-71 

In  installments 5-14,  43-41,  44-41,  47-44,  86-72,  102-83 

Liability  for  non-delivery. . .  .22-28,  30-30,  39-38,  43-41, 

49-45,  91-75 
May  be  stopped  when  buyer  becomes  insolvent.  .27-29, 

71-64,  79-68 

May  not  affect  original  purchaser 38-35 

Delivery  must  be  complete 31-48,  76-66 

Delivery  must  be  made  by  carriers  as  directed 11-20,  61-56 

Not  in  accordance  with  contract 37~33 

On  consignee's  side  track 48-45 

What  constitutes,  on  F.  O.  B.  sales.  .8-15,  37-33,  42-40, 

53-50,  70-62 

Demand  that  shipment  be  returned  cannot  be  enforced 6-18 

Demurrage — see  common  carriers. 

Discount  must  be  in  accordance  with  terms 18-21,  57-53,  69-61 

Draft  (accepted)  with  Bill  of  Lading  does  not  avoid  claim 

for  inferior  lumber 92-76 

Draft  with  Bill  of  Lading  to  order 70-62 

Due  notice,  what  does  it  mean,  etc 83-71 

Endorser  on  note  entitled  to  notice  of  protest 99-8 1 

Executor,  time  for  accounting 23-26 

False  statement  may  prevent  discharge  in  bankruptcy 97~79 

Fire  delaying  shipment,  seller's  liability 50-46 

F.  O.  B. — what  constitutes  delivery 8-15,  37-33,  42-40, 

31-48,  53-50,  70-62 
Foreign  corporations — see  certificates  to  do  business. 

Freight  as  a  consideration  for  passing  title 9-23,  53-50,  54-51 

Freight  rate  advance 1 10-48 

Fraud,  statute  of 65-59 

Indefinite  quantity,  order  for 98-80,  103-84 

Indiana — necessity  of  foreign  corporations  filing  certificates.. .  106-86 

Insolvents,  shipments  to,  can  be  stopped 27-29,  71-64,  79-68 

Insolvency,  cause  for  declining  further  shipments. ..  .67-61, 

71-63,  91-75 
Inspection  on  arnval — privilege  of 62-57,  92-76,  102-83 

Installment  Shipments. 

Acceptance  of  one  installment  validates  verbal  contract.  .  86-72 
Contract  for  delivery,  not  separable,  5-14,  93-77,  102-83, 

(see  Minnesota  case) 107-88 

Cancelling  for  non-payment 47~44,  7I-64 

Cancelling  order  for  non-delivery 43-41 

Delay  in  shipment 44-41 

Using  one  installment  may  constitute  waiver  of  objec- 
tion to  subsequent  installments 102-83 


First  number  gives  number  of  opinion;  second  number  gives  page  number. 

Invoice  terms  not  effective  unless  part  of  contract 82-70 

Judgment  in  one  state  ground  for  suit  in  another 6055 

Kentucky,  necessity  of  foreign  corporations  filing  certificate.  ..106-87 

Loss  for  non-delivery  of  lumber 49~45 

Loss  for  reselling  shipment  refused  on  arrival — method  of 

recovery 1-13,  5-14,  78-67,  94-77 

Lost  shipment,  amount  of  claim  against  carrier 59-55.  73-65 

Maryland,  necessity  of  foreign  corporations  filing  certificate.  .  55-52 
Maximum  and  minimum  amounts  in  contract  of  sale.  .98-80,  103-84 
Measure  of  claim  against  carrier,  13-47.  46-42,  56-53.  59-54.  73~65 
Michigan,  necessity  of  foreign  corporations  filing  certificate.  ..106-88 
Mississippi,  necessity  of  foreign  corporations  filing  certificate.. .106-87 

Mistake  must  be  obvious  to  avoid  contract 72-65 

New   Jersey — certificate    for   individual    dealing   tender   as- 
sumed name 10-22 

New  Jersey  lien  law 21-32 

New  Jersey — necessity  of  foreign  corporations  filing  certifi- 
cate   17-18,  64-58 

New  Jersey  statute  affects  acceptance 81-69 

New  York  City  license  for  agent 3-I7 

New  York  State  certificate  for  individual  dealing  under  as- 
sumed name 10-22 

New  York — necessity  of  foreign  corporations  filing  certifi- 
cate   17-19.  26-32,  63-57,  106-88 

Non-suit  for  foreign  corporations — see  certificates  to  do  business. 


Notice. 

As  to  non-delivery 49~45 

Of  arrival  by  carrier 8-16,  25-31,  28-33,  48-44 

To  agent  is  notice  to  principal 88-74 

To  carrier  when  loading  complete 8-15 

To  carrier  as  to  measure  of  damages 46-43 

What  constitutes  reasonable  notice 83-71 

Offer  accepted  constitutes  valid  contract 72-65,  96-79 

Offer  may  be  withdrawn  until  accepted 96-79 

Ohio — necessity  of  foreign  corporations  filing  certificate 106-87 

Order,  confirmation  by  home  office 65-59,  96-78 

Partial  payment  validates  verbal  contract 65-59,  86-72 

Partial  shipments — see  installment  shipments. 
Pennsylvania — necessity  of  foreign  corporations  filing  certifi- 
cate     19~24 

Postscripts  on  letters  or  contracts  should  be  signed 82-70 

Principal  bound  by  notice  to  agent 88-74 

Principal  not  always  bound  by  salesman's  act 35-36 

Prompt  rejection  of  shipment  necessary  to  avoid  acceptance.  .  62-57 


First  number  gives  number  of  opinion;  second  number  gives  page  number. 

Protest  not  always  necessary 52-50 

Quantity,  order  for  indefinite  quantity 98-80,  103-84 

Railroads — see  common  carriers. 

Reasonable  time  for  shipment,  unless  otherwise  agreed 36-35 

Reasonable  time,  what  does  it  mean. 13~47,  62-57,  83-71 

Refusal  of  seller  to  make  deliveries 49-45 

Refusing  shipment  on  arrival 1-13,  5-14,  56-52,  78-67,  94-77 

Refusing  to  send  shipping  instructions  for  lumber  ordered. .  .    12-20 

Rejection  of  shipment  by  notice  to  railroad 88-74 

Rejected  shipment  may  be  returned  to  consignor  by  carrier.  .   58-54 
Rejection  of  shipment,  carrier  not  always  compelled  to  notify 

consignor 61-56 

Rejection  of  shipment  must  be  prompt 62-57 

Reselling  lumber  refused  on  arrival I~I3>  5~I4>  78-67,  94-77 

Retaining  lumber  shipped  constitutes  acceptance 6-17,  34-36 

Sales  in  installments — see  installment  shipments. 

Sales  on  credit 30-3°,  39-38,  4<>39>  47-44,  67-60,  71-64, 

79-68,  91-75 

Sales  of  indefinite  quantity 98-80,  103-84 

Salesman's  order,  when  accepted 96-79 

Salesman's  power  to  bind  principal 35-36 

Selling  lumber  refused  on  arrival t-1^  5~I4>  78-67,  94-77 

Shipping  instructions  for  lumber  ordered,  refusal  to  send.  . . .   12-20 

Stated  accounts,  advantage  of 101-82 

Statement  of  assets,  etc.,  if  false,  may  prevent  discharge  in 

bankruptcy  97~79 

Statute  of  fraud 65-59 

Stopping  shipment  in  transit 27-29,  71-64,  79-68,  105-85 

Storing  lumber  refused  on  arrival I~I3>  5-I4>  78-67 

Strike  delaying  shipment,  seller's  liability 50-46 

Suit  can  be  instituted  in  one  state  on  judgment  obtained  in 

another  state 60-55 

Suit  by  foreign  corporation  may  not  be  maintained  because  of 

failure  to  file  certificate — see  certificate  to  do  business. 
Taxes  of  foreign  corporations,  89-74.     See  also  certificate  to 

do  business. 

Tender  in  fulfillment  of  contract  should  be  accepted  or  re- 
jected as  a  whole 31-48 

Tennessee — necessity  of  foreign  corporations  filing  certificate. ..106-87 
Terms  of  sale  must  be  part  of  contract,  82-70.    See  also  con- 
ditional clauses  on  letter-heads,  etc. 

Terms  of  sale  should  stipulate  discount 18-21,  57-53,  69-61 

Time  of  shipment,  confirmation  of 36-35 

Time  of  shipment,  reasonable  unless  otherwise  agreed  upon .  .   36-35 

Title,  during  transit  (carrier's  assumption) 61-56 

Title,  not  affected  by  freight  payment 9~23>  53-5°>  54"5T 


First  number  gives  number  of  opinion;  second  number  gives  page  number. 

Title,  when  it  passes 8-16,  22-28,  31-48,  48-45,  53-50, 

54-51,  70-62 

Title,  transfer  after  purchase  holds  original  buyer 38-35 

Using  lumber  shipped  constitutes  acceptance.  .34-36,  90-75,  102-83 

Verbal  contract,  when  valid 65-59,  86-72 

Warehouseman,  carriers'  liability  as 8-16,  48-44 

Warranty  may  survive  acceptance 62-57,  102-83,  108-89 

West  Virginia — necessity  of  foreign  corporations  filing  certifi- 
cate .  ,  .  106-86 


13 


CHOICE  OF  REMEDIES  WHEN  LUMBER  IS  REFUSED 

ON  ARRIVAL. 

Recently  a  member  took  an  order  from  a  dealer  in  Pennsylvania 
for  a  car  of  lumber,  and  after  order  had  been  forwarded  to  the 
mill,  the  buyer  requested  that  a  change  be  made  in  a  certain  size 
included  in  the  order,  which  our  member  advised  would  be  made 
if  shipment  had  not  already  gone  forward  from  the  mill.  It  devel- 
oped, however,  that  shipment  had  been  made  and  that  it  was  too 
late  to  alter  any  part  of  the  original  order.  Upon  arrival  the 
buyer  refused  to  accept  the  lumber  on  the  ground  that  it  was  not 
as  ordered. 

In  connection  with  this  case  we  have  the  following  opinion 
from  an  experienced  attorney: 

Seller  has  the  choice  of  one  of  three  things,  viz.:  First, 
he  may  store  or  retain  the  property  for  the  vendee  and  sue 
him  for  the  entire  price.  Second,  he  may  sell  the  property, 
acting  as  the  agent  for  this  purpose  of  the  vendee,  and  re- 
cover the  difference  between  the  contract  price  and  the 
price  of  resale.  Third,  he  may  keep  the  property  as  his  own 
and  recover  the  difference  between  the  market  price  at  the 
time  and  place  of  delivery  and  the  contract  price.  Usually* 
the  best  course  to  pursue  would  be  to  elect  the  second  rem- 
edy, to  wit:  that  of  acting  as  agent  for  buyer  and  dispose 
of  the  carload  of  lumber  and  recover  the  difference  between 
the  contract  price  and  the  price  of  resale.  By  proceeding 
in  this  manner,  they  may  have  the  use  of  the  price  realized 
from  the  sale,  and  they  have  done  all  that  good  faith  re- 
quired to  the  end  that  any  loss  sustained  be  reduced  to  a 
minimum.  Of  course,  the  seller  on  the  resale  must  dispose 
of  the  goods  in  good  faith  and  the  best  mode  calculated  to 
produce  their  value,  whether  it  be  public  auction  or  by 
broker,  or  any  other  mode  that  can  or  could  be  easily  adopted. 
Opinion  No.  i. 


A  metropolitan  dealer  writes: 

We  took  an  order  in  writing  from  a  party  for  25,000  feet  of 
lumber,  5,000  feet  to  be  delivered  the  latter  part  of  May,  June, 


14 

July,  August,  and  until  all  should  be  taken.  Buyer  accepted  the 
delivery  of  the  shipments  until  June,  when  he  refused  the  ship- 
ment, writing  us  a  letter,  as  trade  was  dull,  to  please  not  ship  any 
more  goods  on  account  of  order  until  he  notified  us.  We  imme- 
diately wrote  him  that  we  should  insist  on  his  living  up  to  the  terms 
of  the  contract.  We  had  our  truckman  make  note  of  the  fact 
that  he  tendered  the  goods  at  their  factory  and  that  they  refused  to 
receive  them.  Now,  can  we  sue  and  collect  for  these  goods,  and 
in  the  future  if  they  refuse  to  receive  them  after  tendering  them 
can  we  sue?  If  we  should  instruct  our  truckman  to  leave  these 
goods  on  the  sidewalk  in  front  of  their  place  of  business,  could 
we  sue,  claiming  this  was  a  proper  delivery  and  collect  for  same  ? 

Reply:  When  goods  are  to  be  delivered  in  a  number  of 
instalments,  as  in  this  case,  the  buyer's  refusal  to  accept 
delivery  of  any  one  instalment  is  a  breach  of  the  whole  con- 
tract; the  seller  may  declare  the  contract  at  an  end,  from 
that  moment,  and  may  sue  and  recover  any  damage  that  the 
breach  of  contract  may  have  caused  him.  The  seller  has  the 
choice  of  three  remedies.  He  may  keep  the  goods  as  his 
own  and  sue  for  the  damages;  he  may  hold  the  goods  as 
agent  of  the  buyer,  informing  the  buyer  that  they  will  be 
delivered  to  him  upon  his  demand,  and  sue  for  the  contract 
price  of  the  goods;  or  he  may  sell  the  goods,  for  account 
of  the  buyer,  giving  the  latter  prior  notice  of  the  time  and 
place  of  sale  and  then  hold  the  buyer  for  any  deficiency. 
A  delivery  of  the  goods  upon  the  sidewalk  in  front  of  the 
buyer's  place  of  business  would  be  of  no  advantage  to  the 
seller  and  it  might  make  him  liable  for  that  part  of  the  goods 
if  the  buyer  neglected  to  take  charge  of  them.  The  seller 
cannot  sue  for  the  price  of  each  instalment,  when  it  has  been 
tendered  and  refused.  This  would  be  to  put  the  buyer  to 
the  expense  of  defending  a  number  of  suits,  all  arising  out 
of  one  contract,  and  this  the  law  does  not  sanction.  Though 
it  calls  for  delivery  at  different  times,  the  contract  is  one 
and  not  several,  and  it  may  be  made  the  basis  of  only  one 
action.  Suit  may  be  brought  as  soon  as  there  is  a  breach 
of  it,  it  is  true,  but  that  suit  must  be  for  all  the  loss  arising 
by  reason  of  the  buyer's  unjustifiable  act,  not  simply  for  the 
value  of  the  single  instalment  tendered  and  refused.  When 
any  suit  is  brought  the  court  will  assume  that  it  is  for  all 
the  loss  arising  out  of  the  contract  and  further  suits  upon 
the  same  cause  of  action  will  be  barred. 
Opinion  No.  5 


15 

INTERPRETATION   OF  "F.  O.  B."  SHIPPING  POINT  OR 
DESTINATION. 

As  there  seem  to  be  many  opinions  on  the  question  of  "owner- 
ship in  transit,"  or  delivery  of  lumber  F.  O.  B.,  and  as  the  associa- 
tion has  received  numerous  inquiries  from  members  covering 
various  phases  of  the  subject,  the  question  has  been  submitted  by 
the  association  to  Mr.  Walter  W.  Ross,  General  Counsel  to  the  Car 
Stake  and  Equipment  Complaint  Executive  Committee,  and  an  ex- 
perienced railroad  attorney,  for  opinion.  While  it  must  be  conceded 
that  such  an  opinion  can  cover  only  a  specific  case,  it  will  probably 
be  of  value  to  many  of  our  members  when  the  question  of  owner- 
ship in  transit  arises,  and  if  followed,  if  adopted  as  a  practical  solu- 
tion, will  help  to  bring  about  a  better  understanding  between  shipper 
and  buyer,  always  keeping  in  mind  however,  that  the  laws  differ  in 
various  States. 

His  opinion  is  as  follows: 

If  A  sells  lumber  to  B  and  the  contract  of  sale  provides 
that  A  shall  deliver  the  lumber  free  on  board  (F.  O.  B.) 
cars  at  a  certain  point,  the  title  to  the  lumber  remains  vested 
in  A,  the  seller,  until  he  has  delivered  the  lumber  at  the  point 
agreed  upon  to  the  buyer  or  his  agent  the  carrier. 

If  the  lumber  is  damaged  while  in  the  possession  of  the 
carrier  in  transit  to  the  point  of  agreed  delivery,  the  ques- 
tion of  the  loss  is  between  the  seller  A  and  the  carrier.  If 
the  lumber  is  damaged  after  delivery  at  the  point  agreed 
upon,  but  while  in  possession  of  the  carrier  the  question  of 
loss  is  between  the  buyer  and  the  carrier. 

The  question  arises  what  constitutes  delivery  f.  o.  b. 
In  the  case  of  shipment  of  lumber  by  rail  it  is  customary  for 
the  shipper  to  load  the  lumber  properly  on  the  car.  It  has 
been  held  by  some  of  the  courts  that  it  is  not  necessary  for 
the  shipper  having  completed  the  loading  to  give  formal 
notice  of  delivery  to  the  carrier  in  order  to  place  the  consign- 
ment in  the  possession  of  the  carrier — (but  it  is  safer  to 
notify  the  carrier  of  such  fact  thereby  eliminating  a  possible 
controversy).  If  the  sale  is  f.  o.  b.  point  of  shipment  the 
delivery  by  the  seller  to  the  carrier  is  delivery  to  the  buyer 
and  from  that  time  the"  carrier  until  it  has  performed  its 
contract  of  transportation  is  the  agent  of  the  buyer.  This 
principle  of  law  is  subject  to  the  exceptions  arising  undef 
the  law  of  stoppage  in  transit,  as  for  instance  if  the  buyer 
becomes  insolvent  after  the  shipment  has  been  made — but 
before  arrival  at  destination. 


16 

It  has  been  held  that  the  liability  of  the  carrier  begins 
as  soon  as  the  consignment  has  been  placed  in  its  possession, 
even  though  the  bill  of  lading  has  not  been  issued. 

The  question  also  arises  when  does  the  liability  of  carrier 
as  such  terminate  by  delivery  to  the  consignee. 

The  general  rule  is  that  when  the  carrier  has  placed  the 
car  of  lumber  on  the  track  which  is  the  usual  and  customary 
place  for  the  consignee  to  unload  and  consignee  has  had  rea- 
sonable opportunity  to  unload,  then  its  liability  as  carrier 
terminates  and  it  is  liable  only  as  a  warehouseman  while  the 
consignment  remains  on  such  track,  which  means  that  the 
carrier  is  required  to  exercise  only  the  degree  of  care  which 
an  ordinarily  prudent  person  would  exercise  to  protect  his 
property  from  loss  or  destruction.  In  some  states  the  statutes 
provide,  or  the  courts  hold,  that  the  carrier  having  placed 
the  car  in  such  position  for  unloading  by  the  consignee,  it 
is  then  the  duty  of  the  carrier  to  send  due  notice  of  that  fact 
to  the  consignee ;  and  until  such  notice  and  reasonable  oppor- 
tunity has  been  given,  the  carrier's  liability  as  such  con- 
tinues. In  other  states  the  carriers  are  not  required  either 
by  statute  or  rule  of  the  courts  to  give  such  notice  of  arrival 
of  consignments,  it  being  held  to  be  the  duty  of  the  consignee 
to  keep  himself  informed  as  to  the  time  of  arrival  of  his 
freight.  This  rule  is  gradually  being  superseded  in  most 
states  by  the  more  reasonable  rule  that  it  is  the  duty  of  the 
carrier  to  send  due  notice  to  consignee  of  arrival  of  freight. 
Opinion  No.  8. 


BUYING  AND  SELLING  AGENT  NEEDS  NO  LICENSE 
IN  NEW  YORK  CITY. 

Very  often  out  of  town  members  who  contemplate  opening  an 
office  in  New  York  City,  inquire  as  to  whether  it  is  necessary  to 
obtain  a  license  in  order  that  their  agent  may  legally  represent 
them.  The  following  appears  to  cover  the  ground: 

Question  from  Baltimore,  Md. — I  am  acting  here  as  a  buying 
and  selling  agent  for  a  lumber  company  outside  of  the  State,  they 
supplying  me  with  the  money  with  which  to  buy  the  lumber  to  ship 
to  them  on  their  orders,  and  I  crediting  them  with  the  proceeds  of 
the  sales  of  lumber  shipped  to  me  to  sell  for  their  account,  my 
compensation  being  a  commission  on  the  sales  ajnd  purchases. 
Under  these  conditions  I  do  not  pay  a  license  here  in  Baltimore, 
but  as  I  expect  shortly  to  move  the  office  to  New  York,  I  will  thank 
you  to  let  me  know  if  I  would  require  a  license  to  conduct  this 
business  in  that  city,  and  if  so,  where  should  I  apply  for  same? 


17 

Reply:  No  license  is  required  in  New  York  City  in 
order  to  carry  on  such  a  business  as  our  correspondent  de- 
scribes. One  who  simply  buys  and  sells  here,  as  agent,  need 
not  make  a  report  or  pay  a  fee  to  any  public  officer.  But 
if  at  any  time  he  carries  on  a  general  mercantile  business,  as 
agent,  he  must  register  and  pay  a  fee.  The  statute  is  as 
follows:  "Any  person  now  carrying  on  or  conducting  a 
general  mercantile  or  manufacturing  business  within  this 
State,  or  hereafter  commencing  such  business  at  or  in  a  fixed 
location  as  agent  or  manager  for  another  or  others,  shall — 
at  the  commencement  of  such  business,  file  a  sworn  state- 
ment, verified  by  such  agent  and  principal  or  principals,  in 
the  county  clerk's  office  of  the  county  within  which  said 
business  is  carried  on,  stating  the  nature  of  the  business 
and  the  full  name  and  residence  of  such  principal  or  prin- 
cipals." The  fee  is  $1.00,  and  failure  to  file  the  statement 
is  a  misdemeanor. 
Opinion  No.  3. 


RETAINING    LUMBER    SHIPPED    CONSTITUTES    AC- 
CEPTANCE. 

The  acceptance  of  lumber,  where  the  grade  is  disputed,  is  the 
subject  of  the  following  correspondence: 

Question. — We  recently  shipped  a  car  of  lumber  to  a  dealer, 
who  claims  that  same  is  not  up  to  the  grade  bought.  We  have 
asked  him  to  return  shipment  and  guaranteed  to  replace  same  with 
material  that  was  absolutely  right.  He  refuses  to  do  so,  and  states 
that  he  will  not  return  it  until  he  receives  lumber  to  replace  the 
lot  he  refused  to  accept.  We  have  sold  this  car  to  another  party, 
who  asks  for  delivery.  We  believe  that  the  original  purchaser  is 
making  an  unjust  claim.  Can  we  demand  that  the  lumber  be 
shipped  back  to  us,  as  the  party  has  refused  to  accept  same  and 
has  not  paid  for  it?  In  case  he  refuses  to  return  it  are  we  under 
any  obligation  to  make  a  second  delivery? 

Reply:  The  purchaser  in  a  case  of  this  kind  has  no 
right  to  any  material  that  previously  belonged  to  the  seller 
except  under  the  contract  which  he  has  with  the  seller. 
When  the  seller  sends  the  purchaser  any  lumber  and  the 
purchaser  keeps  it,  he  keeps  it  either  wrongfully  or  else 
as  being  in  compliance  with  his  contract.  But  the  courts 
will  not  allow  any  man  to  claim,  for  his  own  advantage,  that 
he  is  a  wrong-doer  when  there  is  a  possible  and  reasonable 
explanation  of  his  act  which  makes  it  lawful.  For  this  rea- 


18 

son,  among  others,  a  buyer  of  lumber  when  there  has  been 
no  warranty  of  quality,  who  retains  the  lumber  sent  to  him, 
and  refuses  to  return  it,  is  always  held  to  retain  it  as  being 
perfectly  satisfactory  and  in  compliance  with  the  contract. 
Any  complaint  he  may  make  about  the  delivery  is  of  no 
importance;  it  is  his  act  that  counts.  The  courts  will  insist 
upon  taking  the  most  charitable  view  of  his  conduct,  what- 
ever he  may  say,  and  the  most  charitable  view  is  that  he 
is  doing  right,  and  not  wrong,  and  is  keeping  the  lumber 
because  it  is  a  good  delivery  under  the  contract.  Our  cor- 
respondents can  demand  that  the  lumber  be  returned  if  they 
choose  to  do  so,  but  they  cannot  enforce  the  demand.  If  the 
buyer  does  return  the  lumber,  in  answer  to  such  a  demand, 
he  will  have  a  claim  against  the  sellers  for  another  delivery, 
and  a  valid  one  under  the  contract,  or  for  a  breach  of  the 
contract  in  failing  to  make  a  good  delivery  in  the  first  place. 
If  no  such  demand  is  made,  or  if  it  is  made  and  not  complied 
with,  the  buyer  can  be  compelled  to  pay  the  contract  price 
of  the  goods  on  the  theory  that  his  holding  them  is  an  accept- 
ance under  the  contract.  It  is  idle  for  him  to  say  that  he 
does  not  accept  them;  keeping  them  is  acceptance.  No  sec- 
ond delivery  need  be  made  unless  the  first  delivery  is  promptly 
and  properly  refused  and  returned. 
Opinion  No.  6. 


OBTAINING    CERTIFICATES    PERMITTING    FOREIGN 

CORPORATIONS  TO  DO  BUSINESS  AND 

MAINTAIN  AN  ACTION  IN  NEW 

YORK  OR  NEW  JERSEY. 

Almost  every  State  in  the  Union,  and  especially  the  States  of 
New  York,  New  Jersey,  Pennsylvania,  Massachusetts,  Connecticut, 
etc.,  require  foreign  corporations,  that  is,  corporations  formed  under 
the  laws  of  other  States,  to  procure  a  license  or  certificate  to  do 
business  within  such  State,  and  in  default  thereof  penalties  or  fines 
are  imposed. 

In  considering  the  necessity  of  such  license  the  first  question 
is  to  ascertain  whether  the  corporation  is  transacting  its  business 
in  a  manner  which  could  be  interpreted  as  "doing  business"  in  its 
legal  sense,  and  this  means  generally  filling  all  orders  obtained 
in  that  State  when  more  than  two  or  three  incidental  orders  have 
been  obtained  or  the  maintaining  of  a  place  of  business  in  such 
State.  The  difficulties  in  obtaining  the  certificates  are  not  great 
but  the  details  are  technical  and  the  expense  ranges  from  $10  up- 


19 

wards,  depending  upon  the  laws  under  which  the  company  is  incor- 
porated, there  being  retaliatory  laws  in  some  States.  The  average 
expense  is  about  $25,  and  the  certificates  are  generally  good  for  an 
indefinite  period;  the  only  annual  requirements  being  a  formal 
report  which  does  not  involve  the  giving  of  the  details  of  the  cor- 
poration's business  and  there  is  no  annual  taxation  unless  the  cor- 
poration has  both  property  and  is  doing  business  within  such  State. 

In  many  cases  where  valid  claims  exist  in  favor  of  a  corpora- 
tion of  another  State  against  a  New  York  debtor,  a  serious  obstacle 
arises  where  the  foreign  corporation  has  not  obtained  a  certificate 
to  do  business  in  this  State,  and,  therefore,  cannot  maintain  the 
action.  By  the  statutes  as  last  amended  this  prohibition  covers  also 
any  one  to  whom  such  foreign  corporation  has  assigned  the  claim 
for  collection.  The  provisions  of  the  New  York  corporation  law 
in  this  matter  are  easily  complied  with.  There  has  to  be  a  sworn 
copy  of  the  charter  of  such  foreign  corporation  and  the  designa- 
tion of  some  person  on  whom  process  can  be  served. 

The  objection  to  complying  with  the  statute  in  this  respect  is 
the  possible  liability  to  taxation  after  the  corporation  gets  its  name 
on  the  State  Register.  All  that  is  taxable  in  New  York  State  is 
the  amount  of  capital  used  in  the  State,  and  this  would  be  so  small 
as  to  be  unimportant  provided,  of  course,  that  the  proper  returns 
to  the  tax  departments  at  Albany  and  New  York  are  made  out  each 
year.  This,  we  understand  can  be  done  in  ordinary  cases,  at  a 
charge  of  $10,  for  the  two  reports,  one  to  Albany  and  one  to  New 
York,  and  this  sum  is  a  very  small  tax  to  pay  for  what  must  be 
the  advantages  of  selling  lumber  and  maintaining  the  legal  rights 
connected  with  such  sales  in  New  York  State. 
Opinion  No.  17. 

A    CARRIER    IS    BOUND    TO    DELIVER    LUMBER    AS 

DIRECTED. 

Question. — My  shipper  consigns  me  a  car  of  lumber  and  marks 
the  bill  of  lading  "via  P.  R.  R.  delivery."  If  this  car  arrives  by 
the  C.  R.  R.  of  N.  J.,  can  I  be  compelled  to  accept  same  from 
them,  or  does  my  original  contract  entitle  me  to  insist  on  P.  R.  R. 
delivery? 

Reply :  One  of  the  important  and  imperative  duties  of 
a  carrier  is  to  deliver  the  lumber  as  he  is  directed  to  deliver 
it.  A  direction  to  deliver  it  to  a  specified  connecting  car- 


20 

rier  or  delivery  concern  cannot  be  fulfilled  by  delivering  it 
to  another,  any  more  than  a  direction  to  deliver  it  to  a  cer- 
tain consignee  can  be  carried  out  by  delivery  to  another 
individual.  If  the  carrier  makes  a  wrong  delivery,  as  here 
described,  he  is  guilty  of  conversion.  The  consignee  is  not 
bound  to  accept  the  lumber  from  the  connecting  carrier  to 
whom  it  has  been  wrongly  delivered.  He  may  sue  the  orig- 
inal carrier  for  the  value  of  the  lumber  as  soon  as  he  learns 
that  a  different  delivery  from  that  directed  by  the  bill  of 
lading  has  been  made. 
Opinion  No.  u. 


IF  A  BUYER  REFUSES  TO  TAKE  LUMBER  ORDERED 
THE  SELLER  HAS  A  CHOICE  OF  REMEDIES. 

Question. — Some  time  in  March  last  we  received  an  order  for 
two  cars  of  32-inch  lath.  A  few  days  after  the  order  came  to  hand 
we  received  a  letter  from  our  customer  requesting  us  to  defer  ship- 
ment on  account  of  the  threatened  strike  in  the  coal  regions,  which 
request  was  complied  with.  The  difficulties  between  the  miners 
and  operators  have  of  course  been  adjusted  and  operations  were 
resumed  some  time  ago,  but  our  customer  has  so  far  failed  to  fur- 
nish shipping  directions  for  the  lath,  which  we  had  cut  especially 
for  his  order  and  piled  on  our  docks  ready  for  shipment  at  the  time 
his  request  was  received  to  hold  the  order.  Would  we  not  be  jus- 
tified in  loading  this  stock  up  and  putting  cars  in  transit  in  accord- 
ance with  the  original  order  and  insisting  upon  acceptance  of  same 
upon  arrival? 

Reply :  This  buyer  has  not,  in  our  opinion,  lost  his  right 
to  select  the  route  by  which  the  goods  shall  be  shipped  to  him. 
There  is  no  question  that  his  delay  in  giving  such  instruc- 
tions has  been  unusually  great,  but  the  sellers  on  their  part 
have  given  no  indication  of  an  objection  to  such  delay.  It 
is  clearly  their  right  now  to  demand  that  he  send  shipping 
instructions  immediately  and  to  inform  him  that  they  will 
send  the  goods  by  a  route  of  their  own  selection  if  he  does 
not  name  a  route  by  return  mail ;  then,  if  the  buyer  does  not 
reply,  or  if  he  refuses  to  issue  shipping  instructions,  or  under- 
takes to  repudiate  the  contract,  the  sellers  will  have  a  choice 
of  three  remedies :  They  may  ship  the  goods  to  him  by  any 
suitable  carrier  and  compel  him  to  pay  for  them;  they  may 
inform  him  that  the  goods  are  held  subject  to  his  order,  to 
be  shipped  in  whatever  manner  and  at  whatever  time  he  may 


21 

select,  and  then  compel  him  to  pay  for  them,  or  they  may 
name  a  time  and  place  at  which  the  goods  will  be  sold  at 
auction  for  his  account,  giving  him  sufficient  opportunity  to 
be  present  at  the  sale,  and  may  then  sell  them  at  such  time 
and  place,  holding  him  liable  for  the  necessary  expenses  of 
advertisement  and  sale  and  for  any  amount,  by  which  the 
selling  price  may  be  less  than  the  contract  price. 
Opinion  No.  12. 


UNDER  CERTAIN  CONDITIONS  THE  ACCEPTANCE  OF 

PART  OF  A  DEBT  DOES  NOT  RELEASE 

THE  REMAINDER. 

Question. — One  of  our  customers  recently  sent  us  a  check  for 
less  than  the  amount  of  his  bill,  saying  in  his  letter  that  he  was 
remitting  the  full  amount  due  us.  If  he  had  taken  advantage  of 
the  regular  discount  on  his  last  purchase  (which  he  did  not  do) 
the  amount  now  due  us  would  have  been  within  a  few  dollars  of 
the  size  of  the  check,  but  even  then  the  check  would  not  represent 
the  exact  amount  due  to  us.  He  does  not  say  in  so  many  words 
that  he  is  claiming  a  discount,  just  sends  the  check  and  writes, 
"enclosed  please  find  amount  of  my  bill  to  date."  Something  of 
this  kind  happens  rather  frequently,  and  we  would  like  you  to  ad- 
vise us  whether  we  must  forego  using  that  check  until  we  can 
write  and  straighten  out  the  matter  with  him.  More  is  due  to  us 
than  he  has  paid  us,  and  it  seems  a  hardship  that  we  should  be 
kept  out  of  even  this  part  of  our  claim  during  the  week  or  month 
which  it  may  take  to  have  a  full  understanding  with  our  customer. 

Reply:  The  creditor,  in  a  case  of  this  kind,  is  justified 
in  cashing  the  check  and  still  demanding  the  amount  yet  due ; 
this  amount  he  can  recover  by  suit  if  it  is  not  paid  voluntarily. 
The  buyer,  it  seems,  was  not  entitled  to  a  discount,  and  he 
has  not  made  a  specific  claim  to  any.  Being  indebted  to  a 
certain  amount  he  simply  sends  a  check  for  part  of  that 
amount.  He  does  not  say  that  he  claims  a  discount.  If  this 
check  for  less  than  the  full  amount  due  had  been  accom- 
panied by  a  demand  that  it  be  either  accepted  as  payment  in 
full,  or  else  returned,  a  different  question  might  have  arisen ; 
but  even  then  the  check  might  safely  have  been  cashed  under 
the  facts  of  this  case.  This  case  is  simply  that  of  a  man  who 
owes  $100  and  who  sends  his  creditor  a  smaller  amount.  The 


proper  course  for  the  creditor  is  to  accept  what  is  sent  as  a 
payment  upon  account  and  still  maintain  his  claim  for  what 
is  yet  due 
Opinion  No.  18. 

BANKRUPTCY  AVOIDS  AN  ASSIGNMENT  FOR 
CREDITORS. 

Question. — We  made  a  sale  to  a  firm  who  became  embarrassed 
and  offered  a  compromise  to  their  creditors.  We  accepted  the  set- 
tlement offered,  25  per  cent,  cash  and  25  per  cent,  by  note  at  one 
year.  The  note  given  us  was  not  paid  and  after  some  delay  the 
concern  now  goes  into  bankruptcy.  Please  inform  us  whether  our 
claim  in  the  bankruptcy  proceedings  would  be  the  note  only  or  the 
full  amount  due  under  the  original  sale? 

Reply:  The  compromise  in  this  case,  in  so  far  as  it 
has  not  been  carried  out,  will  probably  be  set  aside  and  all 
the  bankrupt's  estate  be  held  liable  to  his  creditors  under  the 
bankruptcy  proceedings.  It  has  been  held  that  "an  adjudica- 
tion of  bankruptcy  at  the  instance  of  the  bankrupt's  creditors 
on  the  ground  of  a  general  assignment,  avoids  such  assign- 
ment and  subjects  the  property  assigned  to  the  jurisdiction 
of  the  bankruptcy  court  to  be  administered  under  the  Bank- 
ruptcy Act  which  the  creditors  have  invoked." 
Opinion  No  14. 

AN  INDIVIDUAL  MAY  TRANSACT  BUSINESS  UNDER 
A  CORPORATE  TITLE  IN  NEW  JERSEY. 

Frequently  the  question  arises  regarding  a  person's  legal  right 
to  start  business  under  a  corporate  title ;  for  instance,  as  "Can  John 
Smith  conduct  business  as  the  Pine  Lumber  Company,"  etc. 

Question  from  New  Jersey. — A  person  wishes  to  start  a  lumber 
business  in  New  Jersey.  Can  he  adopt  a  style  such  as  "The  Cres- 
cent Lumber  Company"  without  being  incorporated,  the  manager 
being  the  sole  proprietor?  Is  there  anything  necessary  to  be  done 
in  such  a  case  beyond  hanging  out  his  sign  at  his  place  of  business  ? 

Reply:  In  New  York  no  person  is  now  allowed  to  estab- 
lish a  business  under  any  name,  corporate  or  individual, 
except  his  own  name,  until  he  has  first  placed  on  record  in 
the  county  clerk's  office,  in  the  county  in  which  the  business 
is  to  be  carried  on,  a  statement  of  the  facts.  So  far  as 
we  can  find,  however,  there  is  no  similar  statute  in  New 
Jersey.  It  is  a  comparatively  recent  law  in  this  State  and 


23 

there  are  not  many  other  States  that  have  adopted  it.  The 
public  cannot  be  misled  to  its  detriment  by  such  a  method  of 
doing  business  as  our  correspondent  proposes,  and  there  is  no 
common  law  rule  against  it.  If  any  creditor  supposes  that 
the  business  is  being  carried  on  by  a  corporation  he  will  not 
be  harmed  by  the  mistake,  because  the  liability  of  an  indi- 
vidual owner,  or  of  a  firm,  is  greater  than  that  of  the  stock- 
holders of  a  corporation.  A  creditor  who  learns  that  his  busi- 
ness belongs  to  an  individual,  instead  of  a  corporation,  will 
be  benefited  by  the  knowledge,  not  damaged.  If  there  should 
be  a  statute  just  enacted  requiring  registration,  the  county 
clerk  will  know  of  it. 
Opinion  No.  10. 

WHETHER     FREIGHT     IS     PREPAID     OR     ALLOWED 
DOES  NOT  AFFECT  TITLE  TO  LUMBER. 

Question. — A  dealer  in  Buffalo  sells  a  car  of  lumber  to  a  dealer 
in  Baltimore  with  the  understanding  that  freight  is  to  be  allowed 
from  Buffalo  to  Baltimore.  Please  state  whether  there  is  any  dis- 
tinction as  to  the  ownership  of  the  lumber  in  transit,  whether  the 
Buffalo  dealer  prepays  the  freight  in  Buffalo  or  allows  the  Balti- 
more dealer  to  deduct  the  amount  of  freight  in  settlement.  If  the 
freight  is  prepaid  in  Buffalo  at  the  time  of  shipment,  and  the  lumber 
be  lost  in  transit  prior  to  delivery,  is  the  ownership  of  the  lumber 
vested  with  the  Buffalo  or  the  Baltimore  dealer? 

Reply:  If  lumber  is  sold  with  an  understanding  that  the 
seller  is  to  pay  the  freight,  it  makes  no  difference  at  all,  as 
to  ownership  during  transit,  whether  freight  is  prepaid  and 
included  in  the  price,  or  whether  it  is  deducted  from  the  price 
and  left  for  the  buyer  to  pay.  A  seller  is  not  bound  to  carry 
the  lumber  to  its  destination  and  deliver  it  there  unless  he 
has  expressly  agreed  to  do  so.  This  is  true  whether  the 
seller  pays  the  freight  or  not ;  in  either  case  a  valid  delivery, 
transferring  risk  and  title,  may  be  made,  if  the  seller  so 
chooses,  at  the  beginning  of  the  transportation  unless  the 
seller  has  agreed  to  deliver  the  goods  elsewhere. 
Opinion  No.  9. 

OBTAINING    CERTIFICATES    PERMITTING    FOREIGN 

CORPORATIONS  TO  DO  BUSINESS 

IN  PENNSYLVANIA. 

A  recent  attorney's  opinion  contained  some  valuable  informa- 
tion regarding  the  filing  of  certificates  in  New  York  State,  per- 


24 

mitting  foreign  corporations  to  transact  business  in  that  State  and 
maintain  an  action.  We  have  been  asked  for  information  regarding 
the  requirements  of  the  Commonwealth  of  Pennsylvania  in  this 
matter  and  our  attorney  at  Philadelphia,  William  S.  Furst,  Stephen 
Girard  Building,  has  forwarded  the  following  opinion. 

Herewith  follows  an  opinion  embodying  the  essential  points  in 
re  foreign  corporations  doing  business  in  the  State  of  Pennsylvania. 

The  Act  of  Assembly  approved  April  2.2,  1874,  provides  that 
no  foreign  corporation  (this  includes  corporations  created  by  other 
States)  shall  do  any  business  in  this  Commonwealth  until  such  cor- 
poration shall  have  established  an  office  and  appointed  an  agent 
for  the  transaction  of  its  business  therein,  and  it  shall  not  be  law- 
ful for  any  such  corporation  to  do  any  business  in  this  Common- 
wealth until  it  shall  have  filed  in  the  office  of  the  Secretary  of  the 
Commonwealth  a  statement  under  seal  of  such  corporation,  and 
signed  by  the  President  or  Secretary  thereof,  showing  the  title  and 
object  of  said  corporation  and  the  name  of  its  authorized  agent, 
with  a  penalty  attached  thereto  for  violation,  that  a  person  shall  be 
guilty  of  a  misdemeanor,  etc. 

The  words  "doing  business"  do  not  include  a  sale  in  a  foreign 
State,  although  the  goods  are  delivered  in  this  State,  or  taking 
orders,  or  making  sales  by  salesmen  through  agents  going  into 
Pennsylvania  from  another  for  that  purpose. 

In  short,  a  foreign  corporation  engaged  in  strictly  interstate 
commerce,  may  advertise  its  goods,  send  agents  to  solicit  orders, 
take  orders,  make  contracts  of  sale  respecting  the  same,  and  ship 
them  to  customers  in  Pennsylvania,  without  violating  the  act,  and 
may  sue  to  recover  the  price  of  any  merchandise  without  filing  the 
statement  required  by  the  act,  although  the  foreign  corporation  in 
question  has  no  office  or  place  of  business  in  Pennsylvania  and  no 
part  of  its  capital  invested  here. 

A  foreign  corporation,  which  has  not  complied  with  the  Act  above 
stated,  but  has  an  office  or  place  of  business  in  Pennsylvania,  or 
any  of  its  capital  invested  within  the  State,  cannot  enforce  contract 
rights  in  the  courts  of  Pennsylvania. 

It  has  been  recently  decided  by  the  Supreme  Court  of  the  State 
of  Pennsylvania  (the  court  of  last  resort)  that  a  foreign  cor- 
poration which  invests  most  of  its  capital  in  the  State  of  Pennsyl- 
vania for  a  period  of  six  months  while  constructing  a  railway, 
employs  large  numbers  of  men,  but  does  not  file  a  statement  in  the 
office  of  the  Secretary  of  the  Commonwealth,  as  required  by  the 
provisions  of  the  Act  until  two  months  after  completion  of  the 
work,  cannot  recover  for  labor  and  materials  furnished  in  doing 
such  work. 

With  respect  to  the  taxes  imposed  upon  foreign  corporations 


doing  business  in  the  State  of  Pennsylvania,  the  Act  of  May  8th, 
1901,  provides  that  all  foreign  corporations  shall  pay  to  the  State 
Treasurer  for  the  use  of  the  Commonwealth  a  bonus  of  one-third 
of  one  per  centum  upon  the  amount  of  their  capital  actually  em- 
ployed or  to  be  employed  wholly  within  the  State,  and  a  like  bonus 
upon  each  subsequent  increase  of  capital  so  employed.  This  is  not 
an  annual  tax.  It  has  been  defined  to  be  the  price  paid  the  Common- 
wealth for  the  privilege  conferred  on  such  corporation  by  its  char- 
ter. It  is  therefore  in  no  sense  a  tax,  and  the  payment  thereof 
does  not  relieve  any  corporation  from  any  tax  to  which  it  is  other- 
wise subject. 

Respecting  the  taxation  of  foreign  corporations,  they  are  tax- 
able like  domestic  corporations  on  so  much  of  their  capital  stock 
as  is  invested  within  the  Commonwealth  under  the  provisions  of  the 
Act  of  Assembly  approved  June  8th,  1898.  The  tax  is  imposed 
annually  at  the  rate  of  five  mills  upon  each  dollar  of  the  actual 
value  of  the  whole  capital  stock  of  all  kinds  invested  or  represented 
by  capital  invested  within  the  State. 

The  tax  is  settled  by  the  accounting  officers  upon  the  basis  of  a 
report  required  to  be  made  by  all  companies  subject  to  the  tax,  and 
particularly  upon  the  appraisement  of  the  value  of  the  stock  con- 
tained in  such  report.  The  report  is  filed  between  the  first  and  fif- 
teenth of  November  in  each  year. 

Foreign  corporations  are  also  obliged  to  file  a  bonus  report  an- 
nually, from  which  should  appear  whether  there  has  been  any 
increase  in  the  amount  of  the  capital  actually  invested  within  the 
State,  so  that  the  proper  bonus  charges  may  be  made  upon  any 
such  increase  as  above  stated. 
Opinion  No.  19. 

PAYMENT     OF    CLAIMS    BY     AN    EXECUTOR— TIME 
FOR  FINAL  ACCOUNTING. 

Occasionally  the  question  arises  as  to  what  length  of  time  an 
executor  has  to  close  an  estate,  and  the  following,  particularly  the 
second  section,  may  be  helpful: 

Question — Can  an  executor  pay  a  bill  of  $10  or  less,  or  what  is 
the  largest  amount  he  can  pay,  without  having  the  claim  verified 
before  a  notary,  according  to  law? 

2. — Within  what  time  do  the  laws  require  that  an  executor's 
accounts  shall  be  made  up  and  ready  for  final  settlement? 

Reply:  i.  The  law  makes  no  distinction  as  to  the 
amount  of  the  claim  against  the  estate  for  which  an  executor 
should  require  vouchers  and  an  affidavit.  The  statutory  pro- 
vision is  as  follows:  "The  executor  or  administrator  may 


86 

require  satisfactory  vouchers  in  support  of  any  claim  pre- 
sented, and  the  affidavit  of  the  claimant  that  the  claim  is  justly 
due,  that  no  payments  have  been  made  thereon,  and  that  there 
are  no  offsets  against  the  same  to  the  knowledge  of  the  claim 
ant,"  see  Code  of  Civil  Procedure,  Section  2718.  If  an  execu- 
tor should  pay  a  claim  of  any  considerable  size,  without  this 
precaution,  and  the  claim  should  afterwards  turn  out  to  be 
unjust,  he  could  be,  or  probably  would  be,  required  to  repay 
the  amount  to  the  estate. 

2.  The  laws  of  this  State  do  not  fix  any  definite  time  as 
the  limit  within  which  an  executor  must  make  his  final  ac- 
counting. Whenever  a  year  has  expired  since  the  grant  of 
his  letters,  the  surrogate  may  compel  the  executor  to  make 
an  accounting  of  all  that  has  been  done  up  to  that  time.  If 
the  estate  is  then  in  a  condition  to  be  definitely  settled  this 
may  be  done.  If  there  has  been  any  remissness  on  the  part 
of  the  executor  this  may  properly  be  dealt  with  by  the  surro- 
gate. If  the  executor  has  used  due  diligence,  and  still  is  not 
ready  to  make  a  final  accounting,  he  may  have  further  time, 
always,  of  course,  under  the  supervision  of  the  court. 
Opinion  No.  23. 


A  SELLER  MAY  CONTRACT  AGAINST  LIABILITY  FOR 
DELAY  IN  SHIPPING. 

Question — A  company  in  Boston  sells  to  A  in  New  York  800,000 
feet  of  lumber  and  on  the  sales  slip  are  the  words,  "for  delivery,  one 
cargo  in  June,  and  one  in  July."  The  lumber  was  shipped  in  four 
cargoes,  about  200,000  feet  in  each.  The  first  two  were  shipped 
in  July;  the  third  cargo  on  the  i8th  of  August,  and  the  fourth  on 
the  2 ist  of  August.  The  first  two  cargoes  were  accepted  at  the 
contract  price,  $27,  but  the  customer  refuses  the  third  and  fourth 
cargoes,  claiming  that  we  were  late  on  the  deliveries.  It  is  a  well 
known  fact  that  all  through  this  year  vessels  have  been  very  hard 
to  obtain.  Has  the  New  York  dealer  a  right  to  refuse  to  accept  the 
third  and  fourth  cargoes  at  the  contract  price?  The  price  has 
dropped  from  the  spring  to  the  present  time  from  $27  to  say  $24. 
The  customer  claims  the  last  two  cargoes  at  the  going  market  price 
prevailing  at  the  time  they  arrived.  Inasmuch  as  the  cargoes  cannot 
be  sold  over  again,  except  at  a  less  price  than  the  New  York  cus- 
tomer offered,  we  were  obliged  to  let  him  unload  the  last  two  car- 
goes. We  claim  that  the  customer  has  no  right  to  deduct  anything, 
owing  to  the  lateness  of  delivery,  because  our  orders  read,  "subject 
to  delays  caused  by  fires,  strikes  or  other  causes  beyond  our  control." 


27 

Reply:  We  suppose  the  clause  quoted  by  our  corre- 
spondent, "subject  to  delays,"  etc.,  is  incorporated  in  the  con- 
tract or  is  so  prominently  printed  on  the  order  blank  that 
the  buyer  cannot  fail  to  understand  that  the  sale  is  made 
subject  to  it.  If  that  is  true,  and  if  it  is  also  true  that  the 
delay  in  this  case  actually  arose  from  a  cause  beyond  the 
control  of  the  sellers,  then  the  buyer's  position  was  not  ten- 
able at  the  beginning.  It  is  possible,  however,  that  the  buyer 
can  maintain  his  position  now  by  reason  of  the  acquiescence 
of  the  sellers.  The  buyer  had  a  right  to  ask  that  a  deduction 
in  the  price  be  made  by  reason  of  the  delay.  If  the  sellers 
had  refused  this  request  and  demanded  expressly  that  the 
cargo  be  accepted  at  the  contract  price,  or  not  accepted  at  all, 
they  could  have  enforced  their  demand.  It  does  not  appear 
very  clearly  what  answer  the  sellers  made  to  the  buyer's 
request  for  a  lower  price.  Our  correspondent  says :  "Inas- 
much as  the  cargoes  cannot  be  sold  over  again,  except  at  a 
less  price  than  the  New  York  customer  offered,  we  were 
obliged  to  let  him  unload  the  last  two  cargoes."  There  was 
plainly  a  dispute  as  to  whether  the  delay  was  one  which  was 
excusable  under  the  terms  of  the  contract,  and,  if  the  act 
of  the  sellers,  or  their  answer  to  the  request  of  the  buyer 
for  a  lower  price,  can  be  construed  into  an  acquiescence  in 
that  request,  the  sellers  are  now  bound  by  such  acquiescence. 
If  the  sellers  have  always  insisted  that  the  contract  price 
must  be  paid,  that  the  goods  must  be  accepted  in  strict  accord- 
ance with  the  contract,  or  rejected,  then  they  are  in  position 
to  collect  the  full  contract  price  for  all  the  lumber. 
Opinion  No.  24. 


WHEN  LUMBER  IS  SOLD  FOR  DELIVERY  THERE  IS  A 
BREACH  OF  CONTRACT  IF  NOT  DELIVERED. 

Question  from  Buffalo,  N.  Y. — A  sells  B  a  carload  of  lumber 
at  a  given  price  delivered,  Boston  rate  of  freight  for  shipment  from 
the  West.  B  gives  directions  which  are  accepted  by  A  for  ship- 
ment of  car  to  a  point  taking  a  Boston  rate  of  freight.  The  lumber 
is  shipped  as  per  contract,  and  the  consignee  pays  a  sight  draft  with 
bill  of  lading  attached  according  to  terms.  While  in  transit  the 
lumber  is  destroyed.  Is  the  shipper  not  responsible  to  the  consignee 
for  the  lumber,  as  it  was  not  delivered,  as  the  contract  called  for; 
and  after  the  lumber  is  destroyed  does  the  consignee  have  an  option 
of  insisting  on  having  the  shipment  replaced  or  canceling  the  order? 


Reply:  Our  correspondent  calls  attention  to  the  fact 
that  the  contract  in  this  case  called  for  a  delivery  of  the  lum- 
ber at  the  end  of  transportation.  This  being  so,  the  seller 
was  bound  to  carry  and  deliver  the  lumber,  as  well  as  to 
furnish  it.  The  carrier  was  an  agent  of  the  seller  and  if  the 
lumber  is  not  delivered  the  seller  is  to  look  to  the  carrier  for 
damages,  while  the  buyer  looks  to  the  seller.  What  the 
seller  undertook  to  do  in  this  case  was  to  supply  the  lumber, 
to  carry  it,  and  then  to  deliver  it.  If  he  fails  in  either  point 
he  is  guilty  of  a  breach  of  contract.  He  has  failed  to  deliver 
the  lumber;  the  buyer  may  regard  this  as  a  breach  of  con- 
tract, which  it  is,  and  sue  for  such  damages  as  may  have 
come  upon  him  as  a  result  of  the  breach.  The  buyer  cannot 
compel  the  seller  to  replace  this  lumber  with  other;  but  if 
the  seller  would  rather  do  that  than  pay  damages,  and  if  the 
buyer  is  willing  to  have  it  done,  then,  of  course,  it  may  be 
done. 
Opinion  No.  22. 


A  LIQUIDATED  DEMAND  CANNOT  BE  SETTLED  EX- 
CEPT BY  PAYMENT  OF  THE  WHOLE  AMOUNT. 

Question — An  individual  in  Providence,  R.  I.,  who  was  indebted 
to  me,  forwarded  a  check  for  less  than  the  amount  of  his  entire 
indebtedness.  He  stated  on  the  face  of  it  "settlement  in  full."  This 
in  nowise  discharged  his  obligation  to  me  and  I  wrote  him  that  I 
would  credit  his  check  on  account  and  requested  a  remittance  of 
the  balance.  He  takes  the  position  that  under  the  Rhode  Island 
law  he  has  discharged  his  indebtedness.  Please  advise  what  rights 
I  hold  in  the  premises. 

Reply :  We  do  not  find  any  statute  or  decision  in  Rhode 
Island  to  the  effect  that  a  payment  of  this  kind  constitutes 
payment  in  full.  All  the  reported  decisions  by  the  courts  of 
that  State  we  have  been  able  to  find  lay  down  practically  the 
same  rules  upon  the  subject  that  are  enforced  by  the  courts 
of  New  York.  This  payment  was  made  in  New  York,  and 
the  laws  of  this  State  govern  it  in  any  event.  The  law  upon 
the  subject  here  (and,  so  far  as  we  can  learn,  in  Rhode 
Island,  too),  is  briefly  this:  If  there  is  no  doubt,  and  no 
dispute,  as  to  the  amount  due,  then  payment  of  less  than 
that  amount  will  not  discharge  the  debt,  even  though  the 
creditor  agree  to  accept  it  as  a  discharge,  if  there  is  no  release 
under  seal  and  no  new  consideration  given.  If  the  debt  is 
unliquidated,  if  there  is  a  doubt  or  dispute  as  to  the  amount 
of  it,  then  the  debtor's  offer  of  so  much  as  payment  in  full 


29 

constitutes  his  estimate  of  the  amount  really  due.  The  cred- 
itor cannot  accept  the  money  without  accepting  the  estimate. 
The  debtor  has  a  right  to  go  into  court  to  have  the  dispute 
settled,  and  if  the  creditor  is  unwilling  to  accept  the  condi- 
tion under  which  the  money  is  sent  he  is  bound  to  return 
the  remittance  and  allow  the  whole  matter  to  be  determined  in 
some  authoritative  way.  For  decisions  to  the  effect  that  part 
payment  of  a  debt  that  is  liquidated  and  certain  is  not  pay- 
ment in  full,  even  when  the  creditor  accepts  the  money  and 
uses  it,  see  23  N.  Y.,  684;  108  N.  Y.,  470;  i  R.  I.,  496; 
and  8  R.  I.,  381. 
Opinion  No.  20 

PRIVILEGE     OF     STOPPING     LUMBER     IN     TRANSIT 
WHEN  BUYERS  BECOME  INSOLVENT. 

Question — When  lumber  has  been  sold  and  shipped,  and  the 
seller  afterwards  directs  the  carrier  not  to  deliver  it  to  the  buyer 
but  to  return  it  to  him,  is  the  carrier  under  any  obligation  to  return 
it,  or  must  he  go  ahead  and  deliver  it  to  the  buyer,  or  may  he  exer- 
cise his  own  will  in  matter  ?  What  are  the  legal  rights  of  all  parties 
in  such  a  case? 

Reply:  If  one  who  has  sold  lumber  on  credit  learns, 
after  it  has  been  delivered  to  the  carrier,  that  the  buyer 
is  insolvent  it  is  his  right  to  demand  that  the  lumber  be  not 
delivered  to  the  buyer,  but  be  returned  to  him.  This  is  known 
as  the  right  of  stoppage  in  transit,  and  it  is  founded  upon 
the  theory  that  one  who  buys  on  credit  is  bound  by  an  im- 
plied contract  to  keep  his  credit  good  until  the  date  of  pay- 
ment arrives.  In  order  that  the  seller  may  be  entitled  to 
exercise  this  right  the  buyer  must  be  actually  insolvent,  that 
is,  unable  to  meet  his  just  obligations  as  they  fall  due;  the 
lumber  must  be  still  in  the  hands  of  the  carrier,  and  not  yet 
delivered  into  the  actual  or  constructive  possession  of  the 
buyer.  If  the  lumber  is  represented  by  a  bill  of  lading  mak- 
ing it  deliverable  to  the  buyer  or  his  order  that  must  be  still 
under  the  buyer's  control ;  if  he  has  transferred  it  to  a  third 
person,  who  has  taken  it  for  value  and  in  good  faith,  the 
seller's  right  of  stoppage  is  gone.  If  a  seller  who  has  a  right 
to  stop  the  lumber  attempts  to  exercise  the  right  by  directing 
the  carrier  not  to  deliver  it  the  carrier  is  bound  to  obey  the 
direction.  The  carrier,  however,  acts  at  his  peril  in  any  case. 
If  he  obeys  the  instruction  and  refuses  to  deliver  the  lumber 
to  the  buyer,  and  the  buyer  is  solvent,  he  may  bring  an  action 
of  trover  against  the  carrier  immediately.  On  the  other 
hand,  if  the  carrier  disobeys  the  instruction,  and  delivers  up 


30 

the  lumber,  he  makes  himself  liable  to  the  seller,  at  least  to 
the  extent  of  the  buyer's  indebtedness  for  the  lumber,  if 
it  is  a  case  in  which  the  seller  is  justified  in  exercising  his 
right  of  stoppage  in  transit.  Because  of  these  difficulties  of 
his  situation,  the  carrier  is  entitled  to  a  reasonable  time  in 
which  to  investigate  the  financial  condition  of  the  buyer ;  but 
if  he  finally  delivers  the  lumber  to  the  buyer  in  any  case  in 
which  the  seller  had  a  right  to  countermand  the  order  for 
their  delivery,  and  had  done  so,  the  carrier  must  answer 
for  it. 
Opinion  No.  27. 

SALES  FOR  FUTURE  DELIVERY. 

Frequently  the  question  of  credit  arises  after  a  contract  for 
future  delivery  has  been  made,  and  the  following  may  be  helpful: 

Question — Will  you  kindly  give  us  your  opinion  in  the  following 
matter:  A  makes  a  sale  to  B  of  a  certain  quantity  of  lumber  for 
future  delivery,  payments  to  be  made  on  a  credit  of  sixty  days' 
time.  Before  the  delivery  of  lumber  begins,  A  has  reason  to  be- 
lieve that  the  responsibility  of  B  is  not  satisfactory  to  him  and 
refuses  to  ship  the  lumber  except  for  cash  with  discount  for  the 
difference  in  time.  What  redress  has  B  in  this  matter,  if  he  is  not 
in  a  position  to  pay  cash? 

Reply :  The  refusal  of  A  to  ship  the  lumber  to  B  under 
these  circumstances  constitutes  a  breach  of  contract,  for  B 
has  an  action  against  A  for  damages.  Something  more  than 
dissatisfaction  with  B's  financial  responsibility  is  necessary 
to  furnish  A  with  a  valid  excuse  for  his  refusal  to  ship 
except  for  cash. 
Opinion  No.  30. 


IN  MOST  STATES  A  CONSIGNEE  MUST  BE  NOTIFIED 
OF  THE  ARRIVAL  OF  HIS  LUMBER. 

Question — Is  a  railroad  company  obliged  to  notify  the  con- 
signee of  the  arrival  of  lumber  when  it  is  billed  and  the  bill  of 
lading  reads:  "Order  of  shipper,  notify  consignee,"  and  if  the 
carriers  fail  to  notify  the  consignee,  have  they  the  right  to  charge 
demurrage  or  storage  for  the  lumber  so  held?  Would  it  make  any 
difference  if  the  lumber  were  billed  direct  to  the  consignee  and 
were  not  an  "Order  notify  shipment?"  Have  the  courts  made  any 
rulings  of  this  matter,  and  where  can  we  find  them?. 


31 

Reply :  A  railroad  company  is,  of  course,  bound  to  com- 
ply with  the  undertaking  set  forth  in  its  own  bill  of  lading. 
If  it  accepts  goods  to  be  carried  and  delivered  under  a  bill 
which  expressly  directs  it  to  "notify  the  consignee"  there  is 
no  ground  upon  which  it  can  escape  its  obligation  actually  to 
notify  the  consignee  except  the  impossibility  of  finding  him 
by  the  ordinary  means.  If  the  consignee  can  readily  be  found 
the  carrier  has  not  fulfilled  the  task  which  it  has  expressly 
and  in  definite  terms  undertaken  to  fulfill  until  it  has  foun.d 
him  and  notified  him.  It  has  no  right  to  charge  demurrage 
or  storage  until  such  notification  has  been  duly  given.  If 
the  consignee  cannot  be  found  by  the  exercise  of  reasonable 
diligence  then  the  attempt  to  find  him  will  serve  the  carrier 
as  well  as  an  actual  notification.  If  the  bill  of  lading  does 
not,  in  express  terms,  direct  the  carrier  to  notify  the  con- 
signee this  duty  still  rests  upon  the  carrier  by  common  law 
as  it  is  interpreted  in  this  State.  In  some  States  (Massa- 
chusetts, for  example)  the  carrier  is  not  bound  to  notify  the 
consignee  of  the  arrival  of  his  goods  unless  the  contract  of 
carriage  expressly  so  directs.  But  in  New  York  the  courts 
hold  that  this  is  one  of  the  carrier's  duties,  as  carrier,  with- 
out any  special  stipulation  regarding  it.  This  is  the  rule,  as 
the  courts  of  New  York  have  announced  it.  "The  rules  as  to 
the  delivery  of  goods  at  their  place  of  destination  by  a  carrier 
that  prevail  in  this  State  are  as  follows:  If  the  consignee 
be  present  upon  the  arrival  of  the  goods,  he  must  take  them 
without  unreasonable  delay.  If  he  be  not  present,  but  live  at 
or  in  the  vicinity  of  the  place  of  delivery,  the  carrier  must 
notify  him  of  the  arrival  of  the  goods,  and  then  he  has  a 
reasonable  time  to  remove  them.  If  he  be  absent,  unknown, 
or  cannot  be  found,  then  the  carrier  can  place  the  goods  in 
its  freight  house,  and  if  the  consignee  does  not  call  for  them 
in  a  reasonable  time,  its  liability  as  a  common  carrier  ceases." 

Opinion  No.  25. 

OBTAINING    CERTIFICATES    PERMITTING    FOREIGN 

CORPORATIONS  TO  DO  BUSINESS 

IN  NEW  YORK. 

A  previous  opinion  contained  some  information  regarding  foreign 
corporations  obtaining  certificates  to  do  business  in  New  York. 
The  following  additional  information,  from  our  attorney  in  New 
York,  Mr.  Eustace  Conway,  15  William  Street,  regarding  amend- 
ments effective  November  ist,  will  be  interesting: 

There  went  into  effect  on  November  ist,  1906,  various  im- 
portant amendments  to  the  corporation  Tax  Law.  The  annual 


82 

franchise  tax  is  placed  on  a  different  basis  from  what  it  has  been 
heretofore  for  foreign  corporations,  and  the  license  tax  which  for- 
eign corporations  have  to  pay  for  doing  business  in  this  State  is 
also  changed  as  to  its  method  of  determination.  Under  the  new 
law  the  measure  of  amount  of  capital  stock  employed  in  this  State 
(on  which  the  tax  of  l/%  of  I  per  cent,  is  to  be  paid  for  this  cor- 
poration license  to  do  business  here)  is  to  be  such  a  proportion  of 
the  issued  capital  stock  as  the  gross  assets  employed  in  any  busi- 
ness within  this  State  bear  to  the  gross  assets  wherever  employed 
in  business.  As  no  action  shall  be  maintained  in  any  of  the  courts 
of  this  State  by  such  foreign  corporation  without  obtaining  a  receipt 
for  this  license  fee,  it  is  important  to  foreign  corporations  expecting 
to  do  business  here  to  comply  with  the  statute  and  take  out  the 
certificate.  This  tax,  of  course,  is  only  to  be  paid  once  for  the 
license,  unless  later  an  increased  amount  of  capital  stock  is  employed 
in  the  State,  but  this  is  not  likely  to  occur.  The  annual  franchise 
tax  is,  of  course,  a  different  tax,  but  it  is  based  on  the  same  pro- 
portion, except  that  the  amount  of  dividends  is  also  to  be  considered. 
Opinion  No.  26. 


THE  NEW  JERSEY  LIEN  LAW  PROTECTS  MATERIAL 

MEN. 

Question — Please  state  whether  or  not,  under  the  laws  of  the 
State  of  New  Jersey,  a  seller  of  building  materials  comes  in  under 
the  mechanics'  lien  law  the  same  as  the  man  selling  his  labor. 

Reply :  Persons  furnishing  materials  for  the  erection  of 
a  building  are  called  "material  men"  in  the  Mechanics'  Lien 
Law  of  New  Jersey,  and  they  have  a  lien  which  is  protected 
like  that  of  a  laborer.  The  first  section  of  the  law  provides 
that  "every  building  hereafter  erected  or  built  within  this 
State  shall  be  liable  for  the  payment  of  any  debt  contracted 
and  owing  to  any  person  for  labor  performed  or  materials 
furnished  for  the  erection  and  construction  thereof,  which 
debt  shall  be  a  lien  on  such  building,  and  on  the  land  whereon 
it  stands."  It  is  further  provided,  in  a  later  section,  that 
"whenever  any  master-workman  or  contractor  shall,  upon 
demand,  refuse  to  pay  any  person  who  may  have  furnished 
materials  used  in  the  erection  of  any  such  house  or  other 
building — it  shall  be  the  duty  of  such — material  man  to  give 
notice  in  writing,"  etc.  As  a  result  of  this  notice  his  lien 
attaches  and  his  claim  is  protected. 
Opinion  No.  21. 


83 

OBLIGATION   OF  CARRIERS   AS  TO   NOTICE   OF  AR- 
RIVAL TO  CONSIGNEE. 

Question — Is  a  railroad  company,  which  has  accepted  lumber  for 
transportation  to  a  certain  point,  legally  obligated  to  notify  the  con- 
signee at  the  respective  point  of  the  arrival  of  lumber? 

Reply:  The  law  relating  to  the  obligation  of  a  railroad 
company  to  notify  the  consignee  of  the  arrival  of  the  lumber 
at  the  point  of  destination  is  not  uniform  in  all  the  States. 
The  rule  adopted  in  New  York  and  in  most  of  the  States  is 
that  the  carrier  must  give  notice  of  arrival  to  the  consignee, 
and  that  until  notice  is  given,  or  a  reasonable  effort  to  give 
notice  is  made,  the  carrier's  liability  as  carrier  continues  in 
force. 
Opinion  No.  28.  

BUYERS'  POSITION  WHERE,  ON  ARRIVAL,  LUMBER 
IS  NOT  IN  ACCORDANCE  WITH  CONTRACT. 

Question — A  has  sold  to  B  a  carload  of  lumber  to  be  delivered 
on  or  before  November  24,  payment  cash  promptly  after  arrival 
and  examination.  The  lumber  arrives  on  the  24th,  and  A  gives  on 
that  day  to  B  an  examination  order  for  the  lumber,  which  exam- 
ination order  B  accepts.  B  uses  proper  diligence  in  trying  to  ex- 
amine, but,  owing  to  congestion  of  cars  at  the  depot  the  lumber  is 
not  unloaded  for  several  days,  and  he  can  only  examine  it  on  the 
28th.  He  finds  it  to  be  of  a  quality  inferior  to  the  grade  con- 
tracted for  and  rejects  it,  and  his  rejection  is  sustained  by  arbitra- 
tion. B  claims  the  right  to  go  into  the  market  on  the  28th,  buy  a 
carload  of  lumber  of  the  grade  contracted  for  and  demand  from 
A  the  difference  between  the  contract  price  and  the  price  paid  by 
him  on  the  28th.  A  maintains  that  he  can  only  be  held  responsible 
for  the  difference  between  the  contract  price  and  the  ruling  mar- 
ket value  on  November  24,  the  last  date  stipulated  in  the  contract. 
Who  is  right? 

Reply :  This  lumber  was  sold  for  delivery  at  the  buyer's 
end  of  the  route,  the  purchase  price  was  to  be  paid  only  after 
arrival  and  examination.  The  carrier  was  an  agent  of  the 
seller,  and  he  did  not  give  the  buyer  an  opportunity  to  make 
examination  until  November  28.  No  valid  delivery  was 
made,  or  could  have  been  made,  before  November  28,  inas- 
much as  an  examination  by  the  buyer  was  to  precede  such 
delivery.  When  delivery  was  tendered  on  November  28  the 


84 

lumber  was  found  to  be  such  as  the  buyer  was  at  liberty  to 
reject.  He  was,  accordingly,  authorized  to  go  into  the  mar- 
ket on  that  day  and  buy  at  the  price  then  prevailing  in  order 
to  place  himself  in  as  good  a  position  as  he  would  have  been 
in  if  the  seller  had  done  his  duty  and  had  not  been  guilty  of 
a  breach  of  contract.  The  buyer  has  a  right  to  demand  that 
the  seller  shall  place  him  in  this  position. 
Opinion  No.  37. 


LIABILITY  OF  TRANSPORTATION  COMPANY  IN  DE- 
LIVERING WITHOUT  SURRENDER  OF  BILL 
OF  LADING. 

Question — Can  a  transportation  company  be  held  responsible 
for  delivering  a  shipment  of  lumber  to  a  consignee  without  sur- 
render on  the  part  of  the  consignee  of  signed  bill  of  lading,  origin- 
ally issued  when  shipment  was  made? 

Reply:  Until  lumber  shipped  has  been  completely  deliv- 
ered to  the  person  entitled  to  receive  it,  the  bill  of  lading 
represents  the  lumber,  but  no  longer.  The  transfer  of  a  bill 
of  lading  passes  the  title  of  the  transferor  to  the  transferee. 
If,  therefore,  a  transportation  company  delivers  the  shipment 
to  consignee  without  a  surrender  of  the  bill  of  lading  it  is 
liable  to  a  person  who  has  obtained  a  valid  title  to  the  ship- 
ment by  transfer  of  the  bill  of  lading  from  the  consignee. 
Opinion  No  29. 

IF  NO   SPECIFIC  TIME   OF  SHIPMENT  IS  NAMED  A 
REASONABLE  TIME  IS  UNDERSTOOD. 

Question — On  October  25th  we  bought  of  a  manufacturer  a 
carload  of  lumber  through  their  agent.  On  the  3Oth  we  received 
confirmation  of  the  order.  Nothing  was  said  about  the  time  of 
shipment,  except  that  in  sending  the  sizes  on  October  26th,  we  told 
them  to  "ship  at  once."  On  November  ist  they  wrote  that  they 
would  ship  it  "the  coming  week."  No  part  of  it  has  been  shipped 
yet.  We  could  have  disposed  of  the  carload  during  this  time  at  a 
very  good  profit.  During  all  this  time  we  have  been  completely  out 
of  this  kind  of  lumber.  Have  we  a  just  claim  for  damages? 

Reply:  It  does  not  appear  whether  the  confirmation 
received  by  the  buyers  on  October  30  was  sent  by  the  sellers 
before  or  after  their  receipt  of  the  instruction  to  "ship  at 
once."  The  only  importance  of  this  point  is  this :  If  the 


35 

sellers  confirmed  the  order  after  receiving  the  instruction  to 
"ship  at  once,"  they  were  bound  to  ship  at  once.  If  they 
confirmed  the  order  before  receiving  this  instruction,  then 
the  instruction  formed  no  part  of  the  contract,  and  is  not 
to  be  taken  into  account;  in  that  case  the  sellers  were  bound 
simply  to  ship  the  lumber  within  a  reasonable  time — within 
the  time  within  which  these  sizes  commonly  are  shipped.  If 
they  have  not  done  so,  they  are  guilty  of  a  breach  of  contract 
and  the  buyers  may  recover  any  damages  the  breach  has 
caused  them.  They  are  entitled  to  be  placed  by  the  sellers  in 
as  good  a  position  as  they  would  be  in  if  the  sellers  had  carried 
out  their  contract  according  to  its  terms.  The  letter  of  the 
sellers  of  November  i,  saying  they  would  ship  the  goods  "the 
coming  week,"  forms  no  part  of  the  contract.  The  agreement 
was  made  before  that  letter  was  written,  and  it  is  binding 
as  originally  made.  The  letter  is  of  importance,  however, 
as  showing  an  estimate  of  the  sellers  themselves  as  to  what 
was  a  reasonable  date  of  shipment.  The  letter  is  not  binding 
upon  the  buyers,  if  they  can  prove  that  an  earlier  date  would 
have  been  reasonable ;  but  it  is  binding  upon  the  sellers,  who 
wrote  it. 
Opinion  No.  36. 


ONE  WHO   BUYS  LUMBER  IS  LIABLE   THOUGH   HE 
TRANSFERS  IT  BEFORE  DELIVERY. 

Question — An  individual  buys  a  carload  of  lumber  for  future 
delivery  and  before  it  is  delivered  he  forms  a  partnership  with  two 
other  persons  and  turns  the  order  over  to  the  firm.  Delivery  of 
the  lumber  is  made  to  this  firm.  Please  say  whether  the  individual 
is  liable,  or  only  the  partnership.  It  is  a  limited  partnership  and 
the  buyer  has  only  a  certain  definite  amount  at  stake  with  it. 

Reply :  This  is  simply  the  case  of  an  individual  who  has 
purchased  goods  and  then  has  sold  or  transferred  them  be- 
fore they  have  come  into  his  actual  possession.  Such  cases, 
that  is,  of  a  second  sale  before  delivery  to  the  first  purchaser, 
are  very  common,  and  the  original  purchaser  remains  liable 
precisely  as  if  delivery  has  been  made  to  him  and  he  had 
afterward  disposed  of  the  goods  as  he  saw  fit.  In  the  case 
our  correspondent  puts  the  seller  may  look  to  the  first  buyer 
unless  he  has  agreed  to  release  him  and  look  to  the  firm. 
Opinion  No.  38. 


36 

A  LUMBER  SALESMAN  GENERALLY  HAS  NO  POWER 
TO  BIND  HIS  PRINCIPAL. 

Question — One  of  our  traveling  salesmen  has  just  sent  in  a 
larger  order  than  we  feel  safe  in  filling  for  that  particular  cus- 
tomer on  the  liberal  terms  of  credit  allowed  him  in  the  same  con- 
tract. Are  we  compelled  to  fill  the  order,  or  may  we  reject  it  with- 
out incurring  any  legal  liability?. 

Reply :  Ordinarily  a  traveling  salesman  is  authorized 
merely  to  take  orders  and  submit  them  to  his  principal  for 
acceptance  or  rejection.  He  has  no  power  to  bind  his  em- 
ployer irrevocably  by  a  contract  of  sale.  Our  correspondents 
are  justified  in  refusing  to  fill  an  order  sent  in  by  their  sales- 
man unless  the  latter  was  expressly  authorized  to  make  a 
valid  and  binding  sale  upon  his  employers'  behalf,  or  unless 
traveling  salesmen  are  usually  clothed  with  this  power.  In 
the  latter  case  each  salesman  will  be  presumed  to  have  the 
powers  usually  possessed  by  men  of  this  class,  unless  the 
buyer  had  notice  of  a  limitation  upon  this  general  and  usual 
power  in  the  case  of  the  salesman  with  whom  he  was  dealing. 
Opinion  No.  35. 


USING   LUMBER   WITHOUT    CONSENT    OF    SHIPPER 
WHERE  QUALITY  IS  DISPUTED. 

Question — We  shipped  a  carload  of  lumber  to  a  party  and  they 
complained  of  the  quality  and  refused  to  settle  in  full.  We  insisted 
upon  a  settlement  in  accordance  with  invoice,  or  re-inspection  of 
the  entire  carload  by  an  inspector  that  would  be  satisfactory  to 
both  parties.  We  sent  a  man  to  look  at  the  lumber  and  found  that 
it  was  put  in  a  dry  kiln  without  our  consent,  and  this,  of  course, 
prevented  an  inspection  of  the  lumber  in  its  original  condition.  Are 
we  correct  now  in  insisting  upon  a  settlement  in  full  as  invoiced, 
and  can  we  maintain  our  action  in  a  lawsuit? 

Reply:  If  your  lumber  was  received  by  the  company 
and,  without  authorization  from  you  they  put  it  in  the  dry 
kiln,  so  as  to  prevent  your  examining  it  or  taking  it  back, 
they  would  be  liable  to  you  for  the  invoice  price.  They  can- 
not accept  the  lumber,  use  it  and  then  refuse  to  pay.  By  their 
acceptance  they  waive  any  defects  in  quality  or  quantity, 
which  can  be  ascertained  upon  an  inspection  of  the  lumber 
upon  arrival.  They  do  not  waive  any  defects  that  are  what 
we  call  "latent,"  that  is,  that  are  not  readily  ascertainable 


37 

upon  an  examination  of  the  lumber  on  arrival,  but  only  show 
after  the  lumber  may  be  put  in  use.  As  we  take  it,  such 
complaints  as  have  been  made  relate  to  alleged  defects  which 
they  ascertained  as  soon  as  they  received  the  lumber.  In 
that  case  they  had  no  legal  right  to  use  it,  and  if  they  used  it, 
they  are  liable  for  the  invoice  price. 
Opinion  No.  34. 


IN  AN  F.  O.  B.  SALE,  SHIPPING  POINT,  THE  CARRIER 
IS  THE  BUYER'S  AGENT. 

Question — If  I  buy  goods  f.  o.  b.  point  of  shipment  and  part 
of  the  goods  invoiced  are  lost  in  transit  can  the  consignor  enforce 
payment  for  the  goods  not  received? 

Reply :  When  goods  are  bought  f .  o.  b.  place  of  ship- 
ment they  are  delivered  to  the  buyer  at  the  place  of  ship- 
ment. Title  to  the  goods  passes  to  the  buyer  as  soon  as 
delivery  is  made  to  the  carrier  and  the  carrier  is  an  agent 
of  the  buyer  to  bring  his  goods  to  him.  If  the  goods  are  lost 
on  the  way  the  buyer  must  pay  for  them,  just  as  if  they  had 
reached  him;  they  have  reached  his  agent  and  have  been 
delivered  to  him,  and  that  is  all  the  buyer  can  ask.  When 
goods  are  sold  the  presumption  always  is  that  the  buyer  is  to 
take  charge  of  them  in  the  place  in  which  they  are  at  the 
time  of  the  sale.  There  is  no  presumption  that  the  seller 
is  to  carry  the  goods  to  any  place  the  buyer  may  select  and 
deliver  them  to  the  buyer  there.  The  seller  may  do  this,  of 
course,  and  he  frequently  does  do  it;  but  he  is  never  bound 
to  do  it  unless  he  has  expressly  so  agreed.  If  the  buyer, 
in  any  case,  declared  that  the  goods  were  to  be  brought  to 
him  by  the  seller  he  must  show  some  clause  in  the  contract 
that  has  this  meaning;  in  the  absence  of  such  a  clause  the 
buyer,  either  in  person  or  through  an  agent,  is  to  take  pos- 
session of  the  goods  in  the  place  they  occupy  at  the  time  of 
the  sale.  The  words,  "free  on  board,"  are  sufficient  to  pre- 
vent the  seller  from  making  a  good  delivery  while  the  goods 
are  in  his  own  warehouse,  as  he  otherwise  might  do.  These 
words  place  upon  him  the  duty  of  taking  the  goods  to  the  boat 
or  cars  and  meeting  the  expenses  necessary  actually  to  start 
them  on  their  way;  but  when  this  much  is  done  the  seller's 
whole  duty  is  done.  The  goods  then  belong  to  the  buyer 
and  have  been  delivered  to  him ;  that  is  all  that  is  necessary 
to  raise  an  obligation  on  his  part  to  pay  for  them. 
Opinion  No.  33. 


38 

BUYERS    CAN    INSIST    THAT    LUMBER,    PURCHASED 
ON  CREDIT,  BE  DELIVERED. 

A  retailer  says:  "Lumber  was  sold  to  us  by  a  special  written 
contract  on  a  six  months'  credit,  the  lumber  to  be  ordered  out  as 
fast  as  we  saw  fit.  We  have  taken  a  little  more  than  half  and  only 
about  two  of  the  six  months  have  expired.  We  order  another 
small  shipment  to  be  made.  The  seller  replies  that  he  will  send  this 
car,  but  that  he  can  make  no  more  deliveries  unless  we  are  ready 
to  discount  part,  at  least,  of  our  bill.  He  says  that  he  has  already 
extended  credit  to  us  as  far  as  he  feels  justified  in  doing.  He  seems 
to  pay  no  attention  to  the  contract,  under  which  we  were  entitled 
to  order  out  all  of  the  lumber  at  once,  or  in  such  shipments  as 
suited  us,  and  were  to  have  a  credit  upon  the  whole  bill  of  six 
months.  Will  he  be  sustained  in  the  stand  he  has  taken?  If  we 
have  a  remedy  please  say  what  it  is? 

Reply :  When  lumber  has  been  sold  and  part  of  it  deliv- 
ered, it  is  too  late  for  either  the  buyer  or  the  seller  to  alter 
the  contract  without  the  consent  of  the  other.  If  the  sale  is 
upon  credit,  as  in  this  case,  the  terms  of  credit  are  such  as 
have  been  agreed  upon  in  the  beginning.  Either  the  buyer  or 
the  seller  may  ask,  of  course,  to  have  the  terms  changed  be- 
fore all  of  the  deliveries  have  been  made,  but  if  the  other  does 
not  agree  to  the  change  the  contract  must  be  performed  as  it 
was  made.  It  would  be  as  reasonable  for  the  buyer  to  refuse 
to  accept  the  remainder  of  the  lumber  unless  the  terms  of 
credit  were  made  more  favorable  to  him,  as  for  the  seller  to 
refuse  to  continue  his  deliveries  as  agreed  unless  his  new  pro- 
posal as  to  credits  were  accepted.  If  the  seller,  in  the  case 
our  correspondents  put,  refuses  to  go  on  with  the  contract  in 
its  original  form,  the  buyers  will  have  the  same  remedy  they 
would  have  had  if  no  deliveries  at  all  had  been  made.  They 
may  go  into  the  open  market,  when  the  time  for  delivery 
arrives,  buy  lumber  enough  to  finish  out  the  contract,  and  then 
hold  the  seller  for  such  amount  as  they  are  compelled  to  pay 
over  and  above  that  named  in  the  contract.  Or,  if  they  do 
not  choose  to  do  that,  they  may  establish  the  amount  of  the 
loss  arising  from  the  seller's  breach  of  contract  in  any  way  in 
which  it  can  be  shown  to  the  satisfaction  of  a  jury  and  collect 
the  damages  so  established.  Or  the  buyers  may  cancel  the 
remainder  of  the  contract  if  they  prefer  that  course.  There 
is  only  one  exception  to  this  rule.  Any  one  who  has  bought 
goods  on  credit  is  bound  by  an  implied  agreement  to  keep  his 
credit  good,  and  if  he  fails  to  do  so  he  cannot  require  the 
seller  to  deliver  the  goods.  Accordingly,  if  a  buyer,  before  all 
of  the  lumber  is  delivered,  shows  an  inability  to  pay  any  just 


claim  in  the  ordinary  course  of  business,  when  it  falls  due, 
those  who  have  sold  him  on  credit  may  lawfully  refuse  to 
go  on  with  the  deliveries  and  the  buyer  will  have  no  remedy. 
Opinion  No.  39. 


ONE  CUSTOMER  CANNOT  DEMAND  THAT  CREDIT  BE 
EXTENDED  TO  ANOTHER. 

Question — Lumber  corporation  No.  I  bought  from  lumber  cor- 
poration No.  2  several  carloads  of  lumber  for  future  delivery.  Cor- 
poration No.  i,  before  the  agreed  time  of  delivery,  commenced  pro- 
ceedings of  dissolution.  Out  of  corporation  No.  i,  however,  a 
new  corporation,  No.  3,  was  formed.  Corporation  No.  3  now 
demands  of  corporation  No.  2  that  they  deliver  this  lumber.  No.  2 
declines  on  the  ground  that  the  personal,  as  well  as  the  financial, 
standing  of  the  new  corporation  is  entirely  changed.  Do  you  think 
that  corporation  No.  2  has  a  legal  right  to  do  this  ?  Where  the  word 
corporation  is  used  we  mean  that  one  company  is  incorporated  under 
the  laws  of  one  State,  while  the  other  two  companies  are  existing 
under  charters  from  different  States. 

Reply:  If  any  person  or  corporation  has  been  willing 
to  extend  credit  to  corporation  No.  i  that  same  person  or 
corporation  cannot  for  this  reason  be  compelled  to  extend 
credit  to  corporation  No.  3,  or  to  any  other  person  or  cor- 
poration. If  a  corporation  has  bought  goods  and  paid  for 
them  it  may  assign  its  right  under  that  contract,  which  is 
simply  a  right  to  demand  delivery  of  the  goods  to  another 
corporation;  but  if  it  has  bought  goods  on  credit,  and  has  . 
then  gone  into  dissolution,  it  cannot  demand  that  the  credit 
of  any  other  corporation  be  substituted  for  its  own. 
Opinion  No.  40. 


GIVING    A    BAD    CHECK    DOES    NOT    PREVENT    DIS- 
CHARGE IN  BANKRUPTCY. 

Giving  a  worthless  check  for  goods  and  disposing  of  them  im- 
mediately is  not  a  ground  for  refusing  a  discharge  from  bankruptcy. 
Judge  Hough  of  the  United  States  District  Court  has  recently 
granted  a  discharge  to  a  party  who  filed  a  petition  in  bankruptcy 
on  October  24,  1906,  with  liabilities  of  $11,577  and  no  assets.  His 
discharge  was  opposed  by  a  creditor,  who  said  that  on  June  6,  1892, 
the  debtor  bought  $1,964  worth  of  goods,  giving  a  check  in  pay- 


40 

ment,  which  was  deposited  in  bank  and  came  back  marked  "no 
funds."  The  creditor  went  at  once  to  debtor's  place  of  business 
and  found  that  he  had  sold  out  and  left  the  city.  When  debtor's 
application  for  a  discharge  came  up  for  a  hearing  he  excepted  to 
the  specifications  of  objections,  and  Judge  Hough  sustained  the 
exception  on  the  ground  that  the  objections  are  not  within  the 
statutory  list. 
Opinion  No.  41. 


WHAT  IS  CONVEYANCE  ON  F.  O.  B.  SHIPMENT? 

Question — What  is  the  meaning  of  f.  o.  b.  Philadelphia,  Pa.? 
What  is  the  meaning  of  f.  o.  b.  cars  Philadelphia,  Pa.?  Is  there 
any  difference  between  the  two  above?  If  so,  what  is  it? 

2. — In  selling  goods  f.  o.  b.  New  Orleans,  and  same  are  deliv- 
ered alongside  of  steamer,  does  the  shipper  or  consignee  have  to 
pay  cost  of  handling  charges  in  transferring  from  cars  to  steamer; 
that  is,  on  goods  shipped  from  New  York  to  New  Orleans. 

Reply :  ( I )  When  goods  are  sold  f .  o.  b.  place  of  ship- 
ment the  meaning  is  that  the  seller,  for  the  amount  named  in 
the  contract,  will  supply  the  goods  and  will  bear  the  expense 
of  delivering  them  on  board  that  conveyance  which  is  to  carry 
them  to  their  destination.  The  only  difference  between  the 
two  phrases  set  down  above  is  that  the  latter  binds  the  seller 
to  deliver  the  goods  on  the  cars  at  Philadelphia  without  any 
expense  to  the  buyer;  while  the  former  binds  him  to  deliver 
them  at  his  own  expense  on  some  conveyance  not  yet  speci- 
fied, which  will  carry  them  to  the  buyer. 

(2)  If  goods  are  sold  f.  o.  b.  New  Orleans,  and  they 
are  to  be  carried  to  the  buyer  at  some  other  place  in  a  steamer, 
all  expenses  necessary  to  deliver  them  aboard  the  steamer  are 
to  be  borne  by  the  seller.  The  conveyance  on  board  which 
the  goods  are  to  be  delivered  is  that  which  is  to  take  them  to 
their  destination.  If  goods  are  to  be  carried  to  a  buyer  on 
a  steamer  there  is  no  reason  why  he  should  bind  the  seller 
to  load  them  on  freight  cars  and  make  a  tender  of  them  there. 
Opinion  No.  42. 


FAILURE  TO    DELIVER   ONE  INSTALLMENT    CAUSE 
FOR  CANCELLING  ORDER. 

Question — We  purchased  a  quantity  of  lumber  to  be  shipped  in 
February,  March  and  April  in  equal  monthly  shipments.    The  first 


41 

shipment  has  not  been  made  in  February  and  we  would  like  to 
know  whether  this  entitles  us  legally  to  cancel  the  entire  contract 
or  only  the  February  lot.  In  other  words,  does  the  breaking  of  a 
contract  in  one  instance  cancel  the  entire  contract? 

Reply :  When  goods  are  to  be  delivered  in  instalments 
the  courts  of  this  State  hold  that  the  seller's  failure  to  deliver 
one  instalment  justified  the  buyer  in  refusing  to  accept  that 
tender  and  also  in  rescinding  so  much  of  the  contract  as  is 
yet  unfulfilled.  It  is  one  contract,  not  several,  and  the  seller 
cannot  insist  on  a  right  to  deliver  only  such  instalments  as 
he  finds  it  convenient  to  deliver  and  to  have  them  accepted. 
The  buyer  has  not  agreed  to  pay  anything  at  all  for  part  of 
the  goods.  His  contract  is  that  he  will  pay  a  certain  amount 
for  all  of  them.  If  he  is  not  to  have  all  of  them,  it  is  quite 
conceivable,  and  is  often  a  fact  that  any  part  less  than  all  is 
of  very  much  less  than  proportionate  value  to  him;  it  may 
have  practically  no  value  to  him  at  all.  In  any  event,  the 
seller  has  agreed  to  do  a  certain  service  and  the  buyer  has 
agreed  to  pay  a  certain  sum  of  money.  The  court  will  not 
infer  from  that  an  obligation  to  pay  half  the  money  for  half 
the  service  or  to  accept  half  the  service  on  any  condition,  if 
the  other  half  is  to  be,  or  has  been,  withheld. 
Opinion  No.  43. 


Question — A  customer  places  an  order  with  the  mill  for  Novem- 
ber, December,  January  and  February,  proportionate  shipments. 
The  mills  are  unavoidably  delayed  in  executing  the  order,  but  are 
finally  able  to  make  shipment  of  practically  the  whole  order  in 
February.  The  customer  refuses  to  pay  invoices  for  all  the  goods 
shipped  in  February,  but  claims  dating  on  proportionate  amounts 
in  April,  May  and  June.  Is  he  justly  or  legally  entitled  to  the  dating 
and  could  he  hold  the  goods  subject  to  sellers'  order? 

Reply:  There  seems  to  have  been  no  clause  in  this  con- 
tract releasing  the  mill  in  case  of  such  a  delay  as  has  occurred. 
In  the  absence  of  such  a  clause  the  buyer  was  justified  in 
refusing  to  accept  the  goods  when  all  of  them  were  shipped 
in  February.  He  is  entitled  to  hold  the  goods  subject  to  the 
seller's  order,  or  to  return  them.  He  cannot,  however,  force 
another  contract  upon  the  seller  than  that  which  was  actually 
made.  The  mill  may  take  back  its  goods  or  allow  the  buyer 
to  accept  them  upon  such  new  terms  as  may  be  agreed  upon. 
The  buyer  is  justified  in  receiving  the  original  contract.  This 
is  upon  the  supposition  that  the  buyer  has  not  during  the 
past  four  months  said  or  done  anything  to  lead  the  seller 


42 

to  suppose  that  he  was  satisfied  with  the  delay,  that  he  would 
accept  all  of  the  goods  as  readily  in  February  as  if  shipment 
had  been  made  in  strict  accordance  with  the  terms  of  sale.  If 
he  has  done  that  he  is  estopped  now  from  making  any  objec- 
tion to  the  tender. 
Opinion  No.  44. 


AMOUNT  OF  CLAIM  FOR  DAMAGE  AGAINST  CARRIER. 

Question — We  made  a  shipment  via  two  connecting  railroads. 
When  it  reached  a  junction  prior  to  delivery  at  destination,  i.  e., 
a  point  on  the  second  road,  was  badly  or  entirely  damaged  in  a 
wreck,  and  our  customer  asked  that  we  immediately  replace  the 
shipment,  which  we  did,  and  made  another  shipment  of  the  same 
kir.d  of  lumber  four  days  later,  but  in  the  interim  between  the 
time  of  the  first  shipment  and  the  time  we  received  the  replacing 
order  from  the  customer,  the  price  advanced,  and  in  our  second 
invoice  we  naturally  charged  the  customer  for  the  advance.  The 
claim  department  of  the  railroad  now  offers  to  settle  with  us  at 
the  original  invoice  price  of  the  first  shipment  and  declines  to  en- 
teitain  a  settlement  at  the  advanced  price.  We  claim  that  our 
position  is  entirely  legal  in  the  matter,  and  that  we  are  entitled  to 
the  advanced  price  for  the  shipment  that  was  lost,  the  same  repre- 
senting the  value  of  the  goods  at  the  time  the  goods  were  destroyed. 

Reply :  Usually  the  measure  of  damages  in  a  case  of  this 
kind  is  based  upon  the  value  of  the  goods  at  the  time  and 
place  and  in  the  condition  in  which  they  ought  to  have  been 
delivered;  the  freight  is  to  be  deducted  from  this,  if  it  has 
not  been  prepaid,  and  then  interest  is  to  be  added  from  the 
day  on  which  delivery  ought  to  have  been  made  to  the  day 
of  payment;  there  is  to  be  added  also  any  expense  to  which 
the  owner  of  the  goods  has  been  put  as  a  necessary  and  nat- 
ural result  of  the  loss.  What  the  carrier  is  bound  to  do  is 
to  put  the  owner  of  the  goods  as  nearly  as  possible  in  trc» 
same  position  he  would  have  occupied  if  the  carrier  had 
done  his  full  duty  in  the  first  place.  If  the  carrier  had  done 
his  duty  the  owner  could  have  sold  the  goods  at  the  market 
price  on  the  day  of  delivery  at  the  place  of  delivery,  he  would 
have  had  the  interest  on  the  money  thereafter,  he  would 
have  escaped  all  incidental  expenses  arising  out  of  the  loss, 
and  he  would  have  been  called  upon  to  pay  freight  to  the 
carrier,  if  it  had  not  been  paid  in  advance.  There  is  only  one 
exception  to  the  rule  that  is  at  all  common.  If  the  goods 
have  already  been  sold  for  delivery  at  destination,  at  a  price 


43 

less  than  that  which  chances  to  prevail  when  the  day  of  deliv- 
ery arrives,  and  if  the  carrier,  at  the  time  of  shipment,  had 
actual  or  constructive  knowledge  of  this  fact,  then  the  owner 
can  demand  only  the  selling  price  with  interest.  In  that  case, 
if  the  carrier  had  done  his  duty,  the  owner  would  have 
obtained  for  his  goods,  not  the  market  price,  but  only  the 
contract  price.  Whether  the  carrier  had  or  had  not  notice 
of  the  sale  makes  a  difference  in  this  respect;  that  a  carrier 
is  not  to  be  held  for  a  larger  loss  than  he  had  in  contempla- 
tion when  the  freight  rate  was  fixed  and  the  degree  of  care 
demanded  of  him  was  settled.  If  he  had  no  knowledge  of 
the  sale,  actual  or  constructive,  he  is  bound  for  damages 
based  upon  the  market  price,  as  in  the  other  case.  The  fact 
that  other  goods  at  a  different  price  were  sent  to  replace  the 
lost  shipment  does  not  enter  into  the  matter. 
Opinion  No.  46. 


RISK  IN  SENDING  CHECK  TO  DRAWER'S  BANK  FOR 
CERTIFICATION. 

Question — We  received  a  check  from  one  of  our  customers  and 
sent  it  to  the  customer's  bank  for  certification.  The  bank  failed  be- 
fore the  end  of  the  next  day  and  our  check  was  not  paid.  Can 
we  not  return  it  to  the  maker  and  demand  the  face  of  it  from 
him? 

Reply:  If  the  drawer  of  the  check  in  this  case  had  suf- 
ficient money  on  deposit  to  meet  it  our  correspondents  have 
no  other  recourse  except  against  the  assets  of  the  insolvent 
bank;  the  depositor  is  discharged.  The  usual  rule  is  that 
when  a  check  is  delivered  that  is  drawn  upon  a  bank  in  the 
same  place  in  which  the  payee  resides  the  drawer  guarantees 
the  solvency  of  the  bank  during  the  remainder  of  the  day  on 
which  the  check  was  delivered  and  the  whole  of  the  next  day. 
The  holder  has  this  much  time  in  which  to  present  the  check 
and  draw  the  money;  if  the  bank  fails  meanwhile  the  loss  is 
upon  the  drawer  of  the  check  and  the  holder  takes  the  risk 
of  failure  after  the  second  day.  But  this  rule  does  not  apply 
when  the  holder  of  the  check  takes  it  to  the  bank  and  has  it 
certified  before  the  end  of  the  next  day  after  he  receives  it. 
Certification  binds  the  bank  and  releases  the  drawer.  So  far 
as  the  drawer  and  holder  are  concerned,  the  effect  is  precisely 
the  same  as  if  the  holder  had  drawn  the  money  and  had  then 
deposited  it  to  his  own  credit  in  the  same  bank. 
Opinion  No.  45. 


44 

A    CONTRACT    MAY    BE    CANCELLED    WHEN     ONE 
PARTY  IS  GUILTY  OF  BREACH. 

Question — Lumber  has  been  sold  for  delivery  in  installments 
running  through  a  considerable  period.  Payments  are  to  be  made 
in  installments  also.  The  buyer  has  been  very  lax  in  this  regard, 
however ;  he  has  not  made  a  single  payment  strictly  on  time,  and  in 
some  cases  has  delayed  until  the  seller  has  been  compelled  to 
threaten  suit.  Is  the  seller  bound  to  go  on  making  deliveries  to  the 
end  of  the  time  named  in  the  contract,  getting  his  money  whenever 
and  however  the  tardy  buyer  sees  fit  to  pay  it? 

Reply:  If  a  seller  agrees  to  deliver  the  goods  at  certain 
times,  and  the  buyer  agrees  to  pay  for  them  in  installments 
at  given  dates,  each  promise  is  a  consideration  for  the  other. 
If  either  the  buyer  or  the  seller  fails  to  do  his  full  duty  under 
the  contract  he  is  in  no  position  to  demand  that  the  other  shall 
do  what  he  has  agreed  to  do.  In  other  words,  as  soon  as 
either  is  guilty  of  any  breach  of  the  contract  the  other  may 
declare  the  whole  agreement  at  an  end ;  he  may  refuse  to  do 
anything  further  under  the  contract  himself,  and  may  demand 
damages  of  the  person  who  was  guilty  of  the  breach.  If  a 
buyer  fails  to  meet  any  payment  promptly  when  it  is  due,  the 
seller,  if  he  chooses  to  do  so,  may  immediately  rescind  the 
contract  and  bring  suit  for  the  unpaid  installments  and  for 
damages.  If  he  had  not  this  privilege  he  might  be  compelled 
to  go  on  for  months  delivering  his  goods  to  one  who  had 
already  shown  his  unwillingness  or  inability  to  make  good  his 
promise  of  payment. 
Opinion  No.  47. 


LUMBER  ON  A  CONSIGNEE'S  SIDE-TRACK  IS  IN  CUS- 
TODY AND  AT  THE  RISK  OF  THE  CONSIGNEE. 

Question — When  does  the  railway's  liability  end  and  the  con- 
signee's begin  on  lumber  delivered  in  cars  on  the  consignee's  side- 
tracks ;  i.  e.,  if  a  carload  was  burned  in  forty-eight  hours  after  be- 
ing placed  for  the  consignee,  would  the  loss  fall  on  the  transpor- 
tation company  or  the  consignee? 

Reply :  When  a  carload  of  merchandise  is  delivered  upon 
the  consignee's  own  side-track  and  the  consignee  has  notice, 
express  or  implied,  of  that  fact,  then  all  liability  of  the  rail- 
road company  for  the  safety  of  the  merchandise  ceases  at 
once.  The  goods  are  still  in  the  company's  cars,  but  that  is 
not  sufficient  to  make  the  company  liable,  for  the  cars  them- 


45 

selves  are  in  the  custody  of  the  consignee  and  upon  his  prem- 
ises. The  goods  have  been  delivered  to  the  consignee,  and 
that  is  the  last  of  the  duties  the  carrier  undertook  to  perform. 
A  railroad  company  cannot  be  expected,  and  in  some  cases 
would  not  be  allowed,  to  place  its  watchmen  in  private 
freight  yards  and  to  extend  over  and  through  those  yards  its 
system  of  protection  against  fire.  When  cars  containing  goods 
have  been  delivered  upon  the  consignee's  premises  the  goods 
themselves  have  been  delivered  there.  The  carrier  is  no 
longer  liable,  either  as  carrier  or  as  warehouseman  and  the 
courts  have  so  decided. 
Opinion  No.  48. 

WHERE  A  SELLER  REFUSES  TO  MAKE  DELIVERIES, 
BUYER  CAN  PROTECT  HIMSELF. 

Question — A  places  a  contract  with  B  for  future  delivery  of 
lumber  beginning  in  October;  B,  for  certain  reasons,  does  not  care 
to  deliver  this  contract.  A  has  the  opportunity  to  buy  the  identical 
goods  for  the  same  delivery  from  competitors  at  the  same  price, 
after  being  notified  by  B  that  he  does  not  care  to  deliver  this  con- 
tract. Does  the  fact  that  A  has  the  opportunity  to  cover  himself 
on  the  same  conditions  release  B  of  damages  arising  from  non- 
delivery of  the  contract,  or  can  A  wait  until  the  time  of  delivery 
before  buying  goods  in  the  open  market  against  the  contract  of  B 
which  the  latter  refuses  to  deliver? 

Reply :  If  B  is  under  contract  to  deliver  goods  to  A  in 
October,  and  if,  before  October,  he  notifies  A  that  he  does 
not  intend  to  fulfill  his  contract  obligation,  A  may  accept  that 
statement  as  final  and  protect  himself  at  once.  He  may  make 
other  arrangements  for  an  October  delivery  and  compel  B 
to  pay  the  loss,  if  any,  or  he  may  sue  at  once  for  breach  of 
contract.  The  buyer  is  not  bound  to  pursue  this  course,  how- 
ever. He  may  act  upon  the  supposition  that,  upon  further 
consideration  of  the  matter,  the  seller  will  conclude  to  do  his 
duty  after  all;  and  so  the  buyer,  A  in  this  case,  may  wait 
till  the  time  arrives  for  the  October  delivery,  and  may  then 
buy  goods  to  replace  those  that  the  seller  ought  to  have  de- 
livered, holding  the  seller  liable  for  the  loss,  if  any,  or  he 
may  then  sue  for  breach  of  the  contract.  If  this  costs  the 
seller  more  than  the  other  plan  might  have  cost  him,  the 
fault  is  his  own.  He  will  not  be  heard  to  complain  be- 
cause the  buyer  has  taken  it  for  granted  that  he  really  would 
perform  his  contract  obligation  when  the  time  arrived,  in 
spite  of  his  previous  statement  that  he  did  not  intend  to  do 
so. 
Opinion  No.  49. 


46 

ALL  CONDITIONS  OF  A  CONTRACT  MUST  ACTUALLY 
BE  EMBODIED  IN  THE  CONTRACT. 

Question. — The  following  is  a  general  form  that  is  frequently 
printed  across  the  top  of  the  letter  heads  of  manufacturers:  "All 
agreements  are  contingent  upon  fires,  strikes,  delays  of  carriers, 
accident  and  other  contingencies  beyond  our  control."  What  effect 
does  this  have  on  a  contract  when  such  letter  heads  are  used  when 
quoting  prices  and  when  accepting  the  order? 

Reply:  Any  provision  that  is  intending  to  form  part  of  a 
contract  ought  to  be  introduced  into  it  in  express  terms  or 
else  referred  to  so  that  there  can  be  no  mistake  regarding  it. 
In  the  particular  case  under  consideration  the  clause  should  be 
incorporated  in  the  contract  or  acceptance,  or  the  contract 
should  state  that  the  sale  is  made  subject  to  the  terms  and 
conditions  printed  across  the  top  of  the  paper.  Either  one 
of  these  would  be  a  simple,  easy  procedure  and  would  remove 
all  doubt.  A  contract  usually  begins  with  the  name  of  the 
place  and  a  date,  or  with  the  names  of  the  parties;  and  it 
ends  with  one  or  more  signatures.  Both  parties  are  bound 
by  all  that  lies  within  these  limits  and  by  everything  beyond 
that  is  referred  to  as  forming  part  of  the  agreement;  but 
neither  party  is,  as  a  rule,  expected  to  look  anywhere  else — 
even  around  the  margins  of  the  same  paper — to  ascertain 
his  rights  and  liabilities.  It  may  be  possible,  in  some  cases, 
to  make  a  provision  printed  on  the  margin  of  the  paper  con- 
taining the  contract  part  of  the  contract  itself,  but  there  is 
always  more  or  less  doubt  upon  this  point,  and  no  doubt 
should  be  left  where  it  is  so  easy  to  make  the  meaning  plain. 
If  the  marginal  printing  is  to  be  useful  at  all  it  will  be 
mainly  in  connection  with  a  statement  that  the  contract  was 
made  subject  to  a  certain  usage  of  the  business,  or  a  certain 
custom  of  that  particular  house,  and  that  this  custom  was 
well  known  to  the  buyer;  as  proof  of  this  fact  the  words 
across  the  top  of  the  paper  would  be  useful. 
Opinion  No.  50. 

A  CARRIER  IS  LIABLE  FOR  ANY   LOSS  CAUSED   BY 
HIS  DELAY  IN  DELIVERING  GOODS. 

Question. — Inform  us  what  recourse  we  would  have  against  a 
railroad  for  a  shipment  of  lumber  from  Buffalo  to  New  York, 
which  has  already  been  on  the  road  eighteen  days,  as  shown  by  the 
shipping  documents,  and  has  not  arrived  yet.  In  the  meantime  the 
market  dropped  some  10  per  cent,  in  price.  Phis  lumber  was 
bought  f.  o.  b.  Buffalo. 


47 

Reply :  A  carrier  is  bound,  not  only  to  deliver  the  lumber 
entrusted  to  him  for  carriage,  but  to  deliver  it  with  reasonable 
promptness.  The  courts  recognize  the  fact  that  promptness 
of  delivery  has  an  importance  second  only  to  the  fact  of 
delivery  itself.  What  is  to  be  held  as  constituting  reasonably 
prompt  delivery  is  to  be  decided  in  accordance  with  nature 
of  the  goods  and  all  the  circumstances  of  the  particular  case ; 
it  is  such  delivery  as  carriers  of  the  kind  in  question,  car- 
riers by  rail  or  vessel,  as  the  case  may  be,  ordinarily  make 
in  handling  goods  of  the  same  kind  as  those  in  question. 
When  the  time  arrives  for  delivery  to  be  made,  under  this 
rule,  and  the  goods  are  not  delivered  the  consignee  is  entitled 
to  sue  for  their  value  at  destination  on  the  day  on  which 
delivery  ought  to  have  been  made.  If  the  carrier  is  able  to 
deliver  the  goods,  and  offers  to  do  so,  at  any  time  before  he 
has  been  required  to  pay  for  them  as  goods  lost,  the  consignee 
cannot  refuse  to  accept  them  and  still  recover  their  full  value. 
He  is  bound  to  accept  the  goods  whenever  they  are  tendered, 
no  matter  how  great  the  delay  may  have  been;  but  in  such 
a  case  he  still  has  a  valid  claim  for  any  loss  he  may  have  sus- 
tained as  a  result  of  the  delay.  His  damages  are  at  least  as 
great  as  that  amount  by  which  the  market  value  of  the  goods 
on  the  day  of  delivery  is  below  their  market  value  on  the  day 
on  which  delivery  ought  to  have  been  made;  to  this  is  to  be 
added  any  other  loss  or  expense  brought  upon  him  as  a 
direct  result  of  the  carrier's  delay. 
Opinion  No.  13. 


THERE  IS  NO  REMEDY  AFTER  ACCEPTING  LUMBER. 

Question. — I  purchased  some  lumber  from  a  party  in  New  York 
State  at  a  given  figure  f .  o.  b.  shipping  point,  and  had  it  forwarded 
by  the  railroad  company  according  to  my  instructions.  Upon  arri- 
val my  customer  reported  to  me  a  shortage  of  several  hundred  feet, 
of  which  I  in  turn  notified  the  party  from  whom  I  bought.  He 
stated  that  he  hardly  thought  such  a  shortage  was  possible  and 
asked  me  to  retally  the  lumber.  I  communicated  with  my  custo- 
mer, who  told  me  that  the  shortage  reported  was  correct,  and  that 
he  had  used  up  the  lumber  as  he  was  in  need  of  the  lumber,  al- 
though I  requested  him  to  hold  it  intact.  My  customer  in  set- 
tling with  me  deducted  for  the  full  amount  of  the  shortage, 
whereas  the  party  who  sold  to  me  refuses  to  accept  settlement  on 
this  basis,  offering  me  an  affidavit  from  his  shipper  that  the  quan- 
tity alleged  to  have  been  shipped  by  him  was  correct.  Am  I  com- 
pelled according  to  the  New  York  court  rulings  to  remunerate  the 


48 

party  who  sold  to  me  as  per  his  invoice?  He  claims  that  the  lum- 
ber ceased  to  belong  to  him  when  he  placed  it  at  the  railway  com- 
pany's depot  subject  to  my  instructions.  For  this  reason  he  de- 
mands full  payment.  I  am  in  a  position  to  furnish  an  affidavit 
from  the  party  to  whom  I  sold  the  lumber  to  the  effect  that  the 
shortage  actually  occurred  at  destination,  although  the  lumber  was 
received  in  good  condition. 

Reply :  This  lumber  was  sold  f .  o.  b.  shipping  point  and 
it  is  true,  as  the  seller  says,  that  title  passed  to  the  buyer  at 
that  point.  This  fact,  however,  does  not  excuse  the  seller 
for  delivering  short  count  or  tally,  if  he  made  such  delivery. 
He  undertook  to  deliver  a  certain  quantity  of  goods  at  the 
shipping  point,  and  his  contract  obligation  was  not  fulfilled 
unless  he  delivered  that  quantity.  It  does  not  appear,  how- 
ever, that  the  contract  was  such  as  to  allow  the  buyer  to 
accept  less  than  the  quantity  sold  at  a  pro  rata  price.  As  the 
contract  is  described  to  us,  it  was  a  sale  of  a  definite  quantity 
for  a  stipulated  price,  with  no  other  provision.  That  being  the 
case,  the  buyer,  when  tender  was  made  to  him  had  no  choice 
other  than  to  accept  the  tender  as  satisfactory,  or  else  to 
reject  it  and  claim  damages  for  breach  of  contract.  He  did 
accept  the  goods  and  he  used  them.  It  is  too  late  now  for 
him  to  say  that  the  tender  was  in  any  respect  unsatisfactory. 
The  buyer  might  have  rejected  the  goods  on  account  of  short 
tally,  and  then  he  could  either  have  claimed  damages  for 
breach  of  contract,  as  we  have  suggested,  or  he  could  have 
communicated  with  the  seller,  offering  to  take  the  shipment 
at  less  than  the  contract  price — could  have  made  a  new  con- 
tract, in  short.  He  did  neither.  He  accepted  the  goods.  He 
will  not  be  heard  now  to  say  that  they  were,  in  any  respect, 
not  such  goods  as  the  contract  called  for.  Our  correspond- 
ent can  be  compelled  to  pay  for  these  goods  the  full  contract 
price,  and  the  person  to  whom  he  sold  them  can  be  compelled 
to  do  the  same. 
Opinion  No.  31. 


PROPOSED  FREIGHT  RATE  ADVANCE. 

In  view  of  the  agitation  regarding  the  proposed  advance  in 
freight  rates  it  is  suggested  that  our  members  protect  themselves 
as  fully  as  possible  in  making  quotations.  It  is  believed  advisable 
to  use  a  clause  either  printed  or  stamped  on  the  letter-head  or  quo- 
tation stating  substantially  the  following: 

"All  quotations  made  and  orders  accepted  are  based 
on  present  freight  rates." 


49 

Where  this  clause  is  used  it  should  be  printed  or  stamped  in 
such  a  way  that  it  becomes  a  part  of  the  quotation  or  correspond- 
ence.    Stamping  the  clause  on  the  margin  of  a  letter-head  is  con- 
sidered inadvisable. 
Opinion  No.  no. 


ACCEPTANCE  OF  AN  AMOUNT  OFFERED  AS  "PAY- 

MENT  IN  FULL"  MAY  OR  MAY  NOT 

CANCEL  THE  DEBT. 

Question — A  customer  sends  me  a  check  for  a  certain  amount 
and  inserts  the  following  on  the  face  of  his  check :  "In  full  to  June 
i."  Does  my  indorsement  give  my  receipt  in  full  to  this  date  or 
not?  Can  I  indorse  his  check  and  write  him  a  letter  advising  him 
that  I  am  using  the  check  only  to  apply  on  the  account? 

Reply :  Suppose  A  owes  B  a  certain  sum  of  money  and 
there  is  no  doubt  or  dispute  as  to  the  amount  actually  due. 
Then  if  A  pays  to  B  less  than  the  amount,  in  cash  or  by  check, 
saying  at  the  time,  "this  I  tender  as  payment  in  full,"  B  may 
keep  the  money  or  cash  the  check  without  losing  the  right  he 
previously  had  to  demand  what  was  still  due  and  unpaid. 
No  man,  without  the  consent  of  his  creditor,  can  discharge  the 
whole  of  his  debt  by  paying  part  of  it,  if  the  amount  is 
liquidated  and  certain.  Suppose,  however,  that  there  has 
been  no  agreement  as  to  the  amount  due  or  that  there  is  an 
honest  and  well-founded  dispute  concerning  the  matter.  Then 
when  the  debtor  sends  any  reasonable  amount,  with  a  state- 
ment that  it  is  tendered  and  is  to  be  accepted,  if  at  all,  as 
payment  in  full,  that  is  his  estimate  of  the  sum  due.  The 
creditor  cannot  accept  the  tender  without  accepting  the  esti- 
mate ;  if  he  does  accept  the  tender  the  amount  due  is  thereby 
agreed  upon  and  fully  paid.  If  the  creditor  is  not  willing  to 
accept  the  tender  as  payment  in  full  he  must  return  it.  Then 
an  agreement  may  be  reached  as  to  the  amount  actually  due, 
or  if  the  two  cannot  agree  the  matter  may  be  left  to  the 
courts.  The  debtor  has  this  privilege,  in  a  case  of  this  kind, 
because  it  would  be  unfair  to  him  to  allow  the  creditor  to 
keep  what  the  debtor  honestly  believed  to  be  the  whole  sum 
due,  and  still  allow  him  to  sue  for  more,  when,  if  he  had 
brought  his  suit  in  the  first  place  it  is  possible  he  might  not 
have  been  able  to  recover  even  as  much  as  the  debtor  has 
already  paid  him. 
Opinion  No.  51. 


50 

PROTEST    IS    NOT    NECESSARY    TO    HOLD    PARTIES 
PRIMARILY  LIABLE. 

Question — Is  it  necessary,  or  is  it  in  any  way  helpful  to  have  a 
note  or  an  accepted  draft  protested,  regard  being  had  only  to  the 
maker  of  the  note  or  the  acceptor  of  the  draft? 

Reply:  The  object  of  a  protest  is  to  inform  a  person  who 
is  secondarily  liable  upon  a  bill  or  note  that  the  person  pri- 
marily liable  has  been  properly  called  upon  and  has  refused 
to  pay  the  amount.  There  could  be  no  object  in  conveying 
formal  information  of  this  kind  to  the  parties  primarily 
liable,  because  they  know  what  the  facts  are,  they  know, 
that  is,  that  demand  has  been  duly  made  of  them  and  that 
they  have  failed  to  comply  with  it.  Accordingly  it  is  held 
that  protest  and  notice  are  not  necessary  to  charge  the  maker 
of  a  promissory  note  or  the  acceptor  of  a  bill  of  exchange. 
We  believe  this  to  be  the  sound  rule  in  all  cases. 
Opinion  No.  52. 


F.  O.  B.  SHIPMENTS. 

Question. — Please  advise  us,  what  the  position  of  a  shipper  is 
who  takes  an  order  for  a  full  carload  of  material  at  a  price  includ- 
ing freight  to  destination,  but  where  the  shipper  takes  out  a  bill  of 
lading  in  the  name  of  the  buyer.  The  shipper  claims  he  simply 
guarantees  freight  to  destination,  and  having  the  bill  of  lading 
issued  in  the  name  of  the  buyer  places  the  risk  of  loss  or  damage 
in  transit  on  the  buyer. 

Reply:  A  buyer  of  goods  takes  title  to  them  wherever 
they  may  be  at  the  time  of  the  sale  unless  the  contract  pro- 
vides otherwise  or  unless  the  seller  by  some  act  of  his  own 
reserves  the  title  to  himself  during  transportation.  A  mere 
agreement  on  the  part  of  the  seller  to  pay  the  freight  is  not 
sufficient  to  rebut  the  presumption  that  title  was  to  pass 
on  delivery  to  the  carrier.  When  goods  are  sold 
f.  o.  b.  destination  the  seller  undertakes  to  carry  them  to 
their  destination  and  there  deliver  them.  They  are  his 
goods,  and  the  risk  is  his,  until  he  has  tendered 
delivery  at  that  place;  this  is  true  because  the  buyer  cannot 
be  compelled  to  accept  a  tender  made  at  any  other  place; 
but  a  mere  agreement  that,  for  a  given  price,  the  seller  will 
furnish  the  goods  and  pay  freight  upon  to  a  given  place,  does 
not  make  him  liable  for  their  delivery  in  that  place.  If  he 
was  bound  to  deliver  them  at  destination  the  contract  would 
say  nothing  about  freight;  an  obligation  on  the  seller's  part 


51 

to  deliver  the  goods  at  destination  is,  in  itself,  an  obligation 
to  pay  freight  upon  them  or  to  carry  them  himself,  and  it  is 
not  for  the  buyer  to  choose  which  he  shall  do.  If  the  agree- 
ment to  pay  freight  did  place  the  risk  on  the  seller  during 
transportation  he  could  not  escape  that  obligation  by  his  own 
act  in  taking  out  a  bill  of  lading  in  a  particular  form.  If  he 
was  at  liberty,  under  the  contract,  to  deliver  the  goods  at  the 
shipping  point,  however,  he  could  increase  his  obligation  by 
his  own  act,  and  taking  the  bill  of  lading  to  his  own  order 
would,  if  not  otherwise  explained  be  sufficient  for  this  pur- 
pose. In  this  case  the  bill  of  lading  was  taken  in  the  name 
of  the  buyer,  and  that  is  consistent  with  the  seller's  claim  that 
a  valid  delivery  could  be  and  was  made  at  the  shipping  point 
and  the  carrier  was  an  agent  of  the  buyer. 
Opinion  No.  53. 


PAYMENT    OF    FREIGHT    NOT    ALWAYS    TRANSFER 

OF  TITLE. 

Question. — Please  advise  us  if  in  selling  lumber  freight  paid 
to  destination  we  are  liable  for  damage  in  transit.  As  we  under- 
stand it,  when  we  sell  lumber  delivered  at  destination  we  are  liable, 
but  when  we  sell  it  freight  paid  the  buyer  is  liable. 

Reply:  The  person  who  owns  goods  while  they  are  in 
transit  must  bear  the  expense  of  damage  or  loss  if  they  are 
not  insured.  If  the  goods  have  been  sold  the  title  during 
transit  may  be  either  in  the  seller  or  the  buyer.  It  is  some- 
times perfectly  clear  that  title  is  in  one  or  the  other,  while 
in  some  cases  it  is  a  very  difficult  question.  Payment  of 
freight  is  one  item  to  be  taken  into  consideration,  but  it  is 
generally  not  alone  absolutely  conclusive  of  the  question  one 
way  or  the  other.  Our  correspondent  is  correct  in  saying: 
"When  we  sell  goods  delivered  at  destination  we  are  liable." 
It  is  equally  correct  to  say :  "When  we  sell  them,  otherwise 
than  for  delivery  at  destination  the  buyer  is  liable."  It  is 
not  always  true,  however,  that  the  buyer  is  liable  when  the 
seller  pays  the  freight.  Goods  that  had  not  been  ordered,  for 
example,  or  goods  slightly  different  from  those  ordered  might 
be  sent  in  the  expectation  that  the  buyer  would  accept  them. 
In  such  a  case  the  seller  would  probably  prepay  the  freight 
but  title  would  remain  in  him,  and  the  risk  would  be  his, 
until  the  buyer  had  received  the  goods  and  accepted  them. 
If  the  contract  requires  the  seller  to  pay  freight  that  is  good 
evidence,  if  there  is  nothing  on  the  other  side  to  offset  it,  that 
title  and  risk  are  to  be  in  the  buyer  during  transit ;  this  is  so 
because  if  the  seller  was  bound  to  deliver  the  goods  at  the 


52 

buyer's  end  of  the  route  he  would  be  bound  to  pay  the 
freight,  as  a  part  of  this  obligation,  and  would  not  separately 
agree  to  pay  the  freight.  If  the  contract  is  silent  on  that 
subject  the  mere  fact  that  the  seller  pays  the  freight  is  not 
sufficient  to  show  that  he  reserves  title.  All  the  facts  of  the 
case  are  to  be  taken  into  consideration,  the  presumption  being 
that  title  passes  when  the  goods  are  delivered,  properly  di- 
rected, to  the  carrier.  If  the  buyer  claims  that  title  did  not 
pass  to  him  at  that  instant  the  burden  of  proof  is  on  him,  and 
the  mere  fact  that  the  seller  paid  the  freight  is  not  alone 
sufficient  to  overcome  the  presumption. 
Opinion  No.  54. 

FILING  CERTIFICATES  IN  MARYLAND. 

Some  of  our  members  have  recently  received  communications 
from  the  Secretary  of  State  of  Maryland  calling  their  attention  to 
a  law  which  went  into  effect  in  Maryland  June  ist,  1908,  regarding 
filing  certificates  permitting  foreign  corporations  to  transact  busi- 
ness. The  Secretary  of  State's  letter  reads  in  part  as  follows: 

"The  name  of  your  company  appears  on  the  records  of  this  office 
as  a  Foreign  Corporation  doing  business  in  Maryland.  As  the  re- 
cently enacted  Act  of  the  Legislature  repeals  the  law  under  which 
you  are  authorized  to  transact  business  in  this  State,  it  will  be  nec- 
essary for  you  to  comply  with  the  provisions  of  the  new  law,  a  copy 
of  which  I  enclose  herewith,  together  with  a  blank  form,  convenient 
for  use  in  connection  therewith." 

Our  attorney  at  Baltimore  writes  as  follows  regarding  the  neces- 
sity of  complying  with  the  provisions  of  the  law  above  referred  to : 

"It  is  not  necessary  for  a  foreign  corporation  who  maintains  no 
office  or  agency,  or  has  no  assets  in  this  State,  to  file  a  certified 
copy  of  its  charter,  the  required  certificate  under  the  act  and  the 
franchise  tax.  A  foreign  corporation  under  the  facts  above  stated 
may  send  any  number  of  salesmen  for  the  purpose  of  making  sales 
in  this  jurisdiction  without  having  to  comply  with  the  foreign  cor- 
poration law." 
Opinion  No.  55. 

RAILROADS    CAN   INSIST    ON   ACCEPTANCE   OF    DE- 
LAYED SHIPMENTS. 

Question. — I  shipped  a  carload  of  lumber  to  a  customer  con- 
signed to  myself  and  it  was  apparently  lost  in  transit.  The  delay 
caused  my  customer  to  cancel  this  order  with  me,  whereupon  I 
notified  the  railroad  that  I  would  not  accept  delivery  and  would  hold 


53 

it  responsible  for  not  only  the  value  of  the  car,  but  any  damages 
resulting  to  me.  The  car  has  just  turned  up  and  the  railroad  in- 
sists that  I  must  take  it  and  put  in  claim  for  loss.  Am  I  compelled 
to  accept  the  car? 

Reply :  If  the  road  offers  to  deliver  the  lumber  now  the 
consignee  should  accept  it.  A  carrier  is  not  a  dealer,  and 
goods  tendered  by  it  cannot  be  refused,  however  late  the  ten- 
der may  be,  or  however  seriously  the  goods  may  be  damaged, 
provided  they  are  recognizable  as  the  goods  actually  shipped 
and  have  any  value  at  all.  The  consignee  cannot  leave  them 
in  the  hands  of  the  carrier  and  demand  full  value  for  them. 
He  must  accept  them  and  do  the  best  he  can  with  them.  His 
acceptance  of  them  does  not  relieve  the  carrier  of  its  liability, 
and  the  consignee  is  entitled  to  recover  all  loss  caused  by 
delay,  or  by  damage  to  the  goods,  as  soon  as  the  loss  has  been 
ascertained.  If  the  market  price  has  declined  since  the  day 
on  which  delivery  should  have  been  made  that  difference  in 
value  is  to  be  included  in  the  damages ;  usually  that  is  the 
principal  part  of  the  loss,  and  frequently  it  is  the  whole  of  it. 
Opinion  No.  56. 


QUESTION   OF  DISCOUNT. 

Question. — I  take  an  order  from  my  customer,  the  terms  of 
payment  being  stated  2  per  cent.  10  days.  The  buyer  makes  settle- 
ment in  20  days  and  claims  that  he  is  entitled  to  the  discount  by 
paying  interest  for  the  extra  time  which  he  has  taken  over  and 
above  the  ten  days.  On  the  other  hand,  I  claim  that  the  bill  not 
having  been  paid  within  the  discount  period  becomes  net,  and  that 
face  amount  of  the  bill  therefore  becomes  due  on  the  eleventh  day 
Which  is  right? 

Reply:  If  a  contract  of  sale  gives  the  buyer  no  right  to 
a  discount  he  has  no  such  right.  If  the  contract  does  give 
him  a  right  to  a  discount,  upon  certain  terms,  he  must  comply 
absolutely  with  those  terms  in  order  to  entitle  himself  to  the 
discount.  The  situation  is  just  this  :  A  seller  who  is  entitled 
to  demand  the  full  face  of  his  bill,  says  to  the  buyer,  "I  will 
deduct  part  of  the  amount  if  you  will  do  a  certain  thing  at  a 
certain  time  in  a  certain  way."  The  buyer  cannot  fail  to  do 
the  thing  so  specified  at  the  time  and  in  the  manner  named, 
and  still  claim  a  discount  as  if  he  had  done  it.  The  buyer 
is  entitled  to  no  discount  at  all  in  the  case  here  put. 
Opinion  No.  57. 


54 

LUMBER  MAY  BE  RETURNED  TO  THE  CONSIGNOR 
IF  THE  CONSIGNEE  WILL  NOT  ACCEPT  IT. 

Question. — We  ordered  a  carload  of  lumber  from  a  shipper  in 
the  South  and  advanced  $200  on  account  before  the  shipment  ar- 
rived at  its  destination.  This  shipper  received  from  the  railroad 
company  a  bill  of  lading  in  his  name  marked  "non-negotiable," 
which  he  indorses  to  us  and  mails  to  us  and  notifies  the  railroad  by 
letter  that  the  shipment  is  for  us.  On  arrival  we  find  that  the 
lumber  is  not  in  accordance  with  our  order  and  we  refuse  to  accept 
it,  whereupon  the  railroad  stores  it  for  account  of  the  owner.  We 
notified  the  railroad  that  we  would  release  the  car  to  the  shipper 
upon  the  latter  paying  to  us  the  $200  advanced.  The  railroad  has 
since  delivered  the  car  back  to  the  shipper  on  the  latter's  instruc- 
tions by  their  giving  the  railroad  the  usual  bond,  which  the  railroad 
insisted  upon  having,  and  we  still  retain  the  original  bill  of  lading 
indorsed  to  our  order.  We  put  in  a  claim  against  the  railroad 
company  for  the  $200  advanced,  taking  the  position  that  they  had 
no  right  to  deliver  the  car  to  the  shipper  without  the  bill  of  lading 
or  an  order  from  us.  The  railroad  refuses  to  pay  our  claim,  saying 
that  the  bill  of  lading  was  a  non-negotiable  one,  and  inasmuch  as 
the  shipper  took  it  out  in  his  own  name  he  had  a  right  to  regain 
possession  of  the  car,  and  that  we  waived  our  rights,  although 
retaining  the  bill  of  lading,  by  refusing  to  accept  the  lumber  on 
arrival.  We  did  not  pay  the  freight.  What  course  can  we  pursue 
to  recover  the  $200  advanced? 

Reply:  If  a  consignee  refuses  to  accept  goods  shipped 
under  a  non-negotiable  bill  of  lading  they  may  be  returned  to 
the  consignor.  The  carrier  is  not  bound  to  act  as  agent  or 
intermediary  for  the  settlement  of  any  differences  between 
the  two.  Here  our  correspondents  have  simply  extended  a 
credit  of  $200  to  the  shipper.  If  he  does  not  voluntarily 
meet  the  obligation  the  amount  may  be  recovered  by  suit. 
Opinion  No.  58. 


RAILROADS    MUST    PAY    VALUE    AT    DESTINATION 
FOR  DAMAGES  ON  LOST  LUMBER. 

Question. — Should  the  railroad  in  settling  claims  for  shortage 
of  lumber  pay  for  it  at  our  cost  price  or  at  the  current  market  price  ? 

Reply :     Unless  the  contract  between  the  shipper  and  car- 
rier provides  for  some  other  measure  of  damages,  the  prin- 


55 

cipal  amount  to  be  paid  by  the  carrier  when  the  lumber  is 
lost  or  destroyed  is  the  market  value  at  destination.  If  the 
freight  has  not  been  paid  in  advance  it  is  to  be  deducted  from 
market  value.  There  is  to  be  added,  on  the  other  hand,  inter- 
est at  the  legal  rate  from  the  day  on  which  delivery  should 
have  been  made  to  the  day  of  settlement;  and  there  is 
to  be  added  also  any  incidental  expense  to  which  the  con- 
signee may  have  been  put  as  a  direct  result  of  the  carrier's 
failure  to  do  his  duty.  This  is  the  only  way  in  which  the 
consignee  can  be  placed  in  as  favorable  a  position  as  he  would 
have  occupied  if  the  carrier  had  done  his  duty,  the  only  way 
in  which  the  whole  of  the  loss  can  be  placed  upon  the  carrier, 
who  has  caused  it;  and  this  is  what  the  law  aims  to  do  in 
every  case. 
Opinion  No.  59. 

SUIT  CAN  BE  INSTITUTED  IN  NEW  JERSEY  ON  JUDG- 
MENT OBTAINED  IN  ANOTHER  STATE. 

Question. — Some  time  ago  I  secured  a  judgment  in  Pennsylvania 
against  a  party  who  now  lives  in  New  Jersey,  and  has  some  prop- 
erty there.  Can  I  make  collection  in  New  Jersey? 

Reply:  A  judgment  of  a  Pennsylvania  court  can  be  en- 
forced by  a  levy  on  property  in  New  Jersey,  without  regard 
to  the  place  of  residence  of  either  the  plaintiff  or  defendant. 
If  this  judgment  was  secured  in  Pennsylvania  it  is  without 
force  in  New  Jersey.  In  that  case,  however,  another  suit  can 
be  started  in  New  Jersey,  and  the  proceedings  will  be  brief 
and  inexpensive ;  he  will  have  to  prove  merely  that  suit  was 
previously  brought  in  Pennsylvania,  in  a  court  of  competent 
jurisdiction,  and  judgment  rendered  in  his  favor.  Judgment 
in  New  Jersey  will  follow  immediately  and  as  a  matter  of 
course ;  under  that  judgment  he  can  levy  on  property  in  New 
Jersey. 
Opinion  No.  60. 

NOT  ALWAYS  NECESSARY  FOR  CARRIER  TO  NOTIFY 

CONSIGNOR  THAT  SHIPMENT  IS  REJECTED 

BY  CONSIGNEE. 

Question. — Have  we  a  claim  on  the  transportation  company  for 
the  invoice  value  of  the  shipment  under  the  following  conditions: 
We  made  a  shipment  of  a  car  of  lumber,  and  when  it  arrived  at 
destination  the  railroad  offered  it  to  consignee  and  he  refused  it. 
Some  time  later  the  railroad  sold  the  lumber  for  what  it  would 
bring,  which,  it  appears,  was  only  about  50  per  cent,  of  our  invoice. 


56 

Is  the  transportation  company  under  obligation,  in  a  case  of  this 
kind,  to  notify  the  shipper  that  the  lumber  is  at  destination  refused 
and  thereby  give  the  shipper  an  opportunity  to  dispose  of  the  lum- 
bei  without  loss? 

Reply:  If  a  carrier  has  no  notice  to  the  contrary,  he  is 
entitled  to  assume  that  the  consignee  is  owner  of  the  lumber 
and  that  any  delivery  or  disposition  of  it  of  which  the  con- 
signee cannot  complain  will  be  satisfactory  to  all  persons.  If 
the  goods  are  sent  C.  O.  D.  or  if  the  carrier  is  instructed  not 
to  deliver  them  to  the  consignee  until  they  are  paid  for,  or 
if  he  receives  any  instructions  from  which  he  may  infer  that 
the  consignor  retains  title  to  the  goods,  in  any  such  case,  it 
becomes  the  carrier's  duty  to  inform  the  consignor  of  the  con- 
signee's refusal  to  accept  the  goods.  The  same  result  follows 
if  the  carrier  is  expressly  directed  to  give  such  notice  and  if 
he  accepts  the  goods  under  these  directions.  In  any  other  case 
the  carrier  is  not  bound  to  assume  that  the  goods  have  been 
sold  and  that  the  consignor  is  retaining  title  to  them  to  secure 
payment  of  the  purchase  price,  or  that  the  consignor  has  any 
interest  in  them  at  all.  He  may  assume  that  the  consignee 
has  already  paid  for  them,  or  that  they  were  the  property  of 
the  consignee  before  shipment.  The  consignor  has  put  it  in 
the  power  of  the  consignee  to  take  the  goods  and  do  as  he 
pleases  with  them,  and  the  carrier  is  bound  merely  to 
act  in  such  manner  that  the  consignee  may  have  no  valid 
ground  of  complaint.  In  the  absence  of  special  instructions 
to  the  carrier,  or  of  knowledge  on  his  part  that  the  goods 
belong  to  the  consignor,  the  rule  is  simply  this:  That  the 
carrier  is  not  to  be  expected  to  deal  with  two  different  per- 
sons with  reference  to  a  single  shipment  or  the  disposition 
to  be  made  of  it ;  that  he  may  safely  assume  such  an  under- 
standing between  consignor  and  consignee  that  they  will  keep 
each  other  informed,  if  necessary,  and  that  anything  that 
satisfies  the  consignee  will  satisfy  the  consignor.  There  is 
nothing  in  the  question  asked  to  show  that  it  was  the  car- 
rier's duty  to  notify  the  consignor  in  this  case. 
Opinion  No.  61. 


LUMBER  IS  ACCEPTED  UNLESS  REJECTED 
PROMPTLY. 

Question. — A  retailer  goes  away  leaving  his  son  in  charge  of 
the  business.  The  son  asks  us  to  ship  a  car  of  lumber  and  we  sell 
it  to  him,  acting  for  his  father,  invoicing  the  car  and  mailing  the 
bill  of  lading.  The  car  arrives,  the  son  surrenders  the  bill  of  lading 
to  the  railroad  and  orders  the  car  placed  on  his  father's  siding  for 


57 

unloading.  For  some  reason  the  son  decides  not  to  \inload  the  car 
before  the  arrival  of  the  father,  which  will  be  in  about  a  week.  When 
the  father  arrives  he  claims  the  lumber  is  not  up  to  grade  and  refuses 
to  accept  same,  unless  we  make  an  allowance.  Does  not  the  accept- 
ance of  the  bill  of  lading  and  its  surrender  to  the  railroad  con- 
stitute a  delivery  of  the  lumber  and  entitle  us  to  our  money  without 
question  whether  we  are  right  or  wrong  about  the  quality  of  the 
lumber?  It  is  possible,  of  course,  that  a  very  small  proportion 
of  this  lumber  may  be  a  little  off,  but  the  difference  is  very  slight, 
and  would  show  only  the  difference  that  any  two  inspectors  would 
make  in  going  over  the  car  of  lumber. 

Reply :  A  buyer  of  goods  is  bound  to  inspect  them  with 
reasonable  promptness,  after  he  has  an  opportunity  to  do  so, 
and  then  accept  or  reject  them  at  once.  Reasonable  prompt- 
ness is  greater  promptness  than  was  shown  in  this  case, 
unless  there  were  some  unusual  facts  in  connection  with  it  of 
which  we  are  not  informed.  A  buyer  is  seldom  justified  in 
delaying  his  inspection  beyond  the  next  day  after  arrival  of 
the  goods.  If  he  does  not  reject  the  goods  with  reasonable 
promptness,  whether  he  sees  fit  to  inspect  them  or  not,  then 
he  is  held  to  an  implied  acceptance.  They  are  placed  in  his 
hands.  He  may  do  as  he  likes  about  examining  them,  but  he 
must  reject  them  promptly,  if  he  is  to  reject  them  at  all.  If 
he  does  not  reject  them  promptly  any  remedy  he  may  have 
had  is  gone  unless  the  goods  were  sold  to  him  under  a  war- 
ranty of  quality. 
Opinion  No.  62. 

NEW  YORK  INCORPORATION  LAW. 

In  view  of  a  recent  decision  regarding  the  corporation  law  of 
New  York  State  and  its  probable  effect  upon  foreign  corporations 
doing  business  in  this  State,  we  have  asked  our  attorney  in  New 
York  for  information,  and  the  following  is  submitted: 

"At  the  end  of  January  last  there  was  handed  down  a  decision 
in  the  Court  of  Appeals,  which  was  later  printed  in  190  N.  Y.,  set- 
tling the  disputes  which  had  arisen  as  to  the  necessity  for  obtaining 
certificates  of  license  to  do  business  in  this  State  as  a  condition 
precedent  to  suing  here. 

"It  holds  that  in  compliance  with  the  General  Corporation  Law 
it  must  be  alleged  and  proved  by  a  foreign  corporation  in  order  to 
establish  a  cause  of  action  in  the  courts  of  this  State.  The  cases 
hoMing  otherwise,  should  be  regarded  as  overruled  and  the  conflict 
of  authority  ended. 


58 

"And  it  is  further  held  that  an  objection  to  a  complaint  on 
this  ground  is  not  waived  by  the  failure  to  raise  it  in  the  defendant's 
pleadings,  but  can  be  raised  at  any  time. 

"A  little  later  the  court  also  held  that  this  rule  applied  just  as 
much  as  to  the  assignee  of  a  foreign  corporation's  claim,  except  as 
to  negotiable  paper  taken  in  good  faith  from  the  corporation  before 
maturity. 

"It  follows  that  any  foreign  corporation  desiring  to  do  business 
in  New  York,  whether  on  a  large  or  small  scale,  must  comply  with 
the  statute  and  take  out  a  license  and  pay  the  franchise  at  the  end 
of  the  first  year,  and  I  suggest  that  this  should  be  brought  to  the 
attention  of  your  foreign  lumber  corporations." 

(If  further  information  is  wanted  by  any  members  whose  busi- 
ness is  incorporated  under  a  State  law  other  than  New  York,  we 
shall  be  pleased  to  hear  from  them.) 
Opinion  No.  63. 


NEW  JERSEY  INCORPORATION  LAW. 

Question. — Under  New  Jersey  laws  a  New  York  corporation 
doing  business  in  New  Jersey  must  register  in  Trenton.  We  did 
a  large  amount  of  business  before  we  were  aware  of  this,  but  ulti- 
mately registered.  In  suing  one  of  our  customers  we  were  non- 
suited because  we  were  not  registered  at  the  time  the  goods  were 
sold,  but  this  was  in  an  inferior  court.  Does  the  fact  that  we  were 
not  registered  in  Trenton  at  the  time  the  goods  were  sold  completely 
shut  us  off  from  recovering  in  the  State  of  New  Jersey  ? 

Reply:  We  believe  that  our  correspondents  will  not  be 
allowed  to  maintain  this  suit;  they  are  prevented  from  main- 
taining it  as  much  by  the  laws  of  their  own  State  of  New 
York  as  by  those  of  New  Jersey.  The  law  of  the  case  stands 
thus:  The  New  Jersey  statute  requires  all  foreign  corpora- 
tions to  file  certain  documents  with  the  Secretary  of  State  and 
to  take  out  a  certificate  authorizing  them  to  do  business  in 
New  Jersey.  It  is  further  provided  that  "until  such  corpora- 
tion so  transacting  business  in  this  State  shall  have  obtained 
said  certificate  of  the  Secretary  of  State,  it  shall  not  maintain 
any  action  in  this  State,  upon  any  contract  made  by  it  in  this 
State."  If  this  were  all  our  correspondents  could  take  out  a 
certificate  any  time  and  then  sue;  this  section  only  forbids 
them  to  sue  before  taking  out  a  certificate.  It  is  further  pro- 
vided, however,  that  when  another  State  imposes  any  greater 
penalties  on  New  Jersey  corporations  than  the  laws  of  New 
Jersey  impose  upon  corporations  of  that  State,  the  same  pen- 
alties shall  be  imposed  on  corporations  of  such  other  State 


59 

doing  business  in  New  Jersey.  Now,  it  is  provided  by  the 
General  Corporation  law  of  this  State  (Sec.  16)  that  foreign 
corporations  must  take  out  certificates  as  in  New  Jersey,  and 
that  "no  foreign  stock  corporation  doing  business  in  this 
State  shall  maintain  any  action  in  this  State  upon  any  contract 
made  by  it  in  this  State  unless  prior  to  the  making  of  such 
contract  it  shall  have  procured  such  certificates" ;  that  is  the 
reason  a  New  York  corporation  doing  business  in  New  Jer- 
sey is  not  allowed  to  sue  in  the  courts  of  that  State  on  a  con- 
tract made  therein  unless  it  had  taken  out  its  certificate  before 
the  contract  was  made. 
Opinion  No.  64. 


A  LARGE  CONTRACT  SHOULD  BE  IN  WRITING. 

Question. — In  the  summer  one  of  our  salesmen  sold  a  car  of 
lumber  for  September  delivery,  the  salesman  handing  the  buyer  copy 
of  the  order  at  the  time  of  purchase.  On  previous  purchases  made 
by  this  same  customer  he  has  been  in  the  habit  of  sending  in  a  con- 
firmation of  the  order  on  which  appear  the  words  "No  order  valid 
unless  signed  by  one  of  the  members  of  the  firm."  No  such  con- 
firmation was  received  by  us  for  the  last  order  placed,  the  same 
having  been  overlooked  by  us,  and  we  shipped  the  goods  to  them 
upon  the  agreed  delivery  date.  And  they  write  us  now  that  as  no 
confirmation  was  given  they  cannot  accept  the  goods  and  hold  them 
subject  to  our  order.  They  write  further  that  their  former  buyer 
brought  up  the  memorandum  order  for  these  goods,  but  that  they 
declined  to  confirm;  but  of  this  latter  act  we  had  no  knowledge. 
Please  inform  us  where  we  stand  in  this  matter. 

Reply :  In  nearly  every  State  there  is  a  statute  declaring 
that  the  purchaser  of  goods  to  the  value  of  $50  or  more  shall 
not  be  legally  liable  unless  he  signs  a  written  contract' or  part 
of  the  price  is  paid  or  part  of  the  goods  are  accepted.  The 
wording  of  the  statute  in  New  York  State  is  as  follows: 
"Every  agreement,  promise  or  undertaking  is  void,  unless 
some  note  or  memorandum  thereof  be  in  writing,  and  sub- 
scribed by  the  party  to  be  charged  therewith,  or  by  his  lawful 
agent,  if  such  agreement,  promise  or  undertaking — is  a  con- 
tract for  the  sale  of  any  goods,  chattels  or  things  in  action 
for  the  price  of  $50  or  more,  and  the  buyer  does  not  accept 
and  receive  part  of  such  goods,  or  the  evidences,  or  some  of 
them,  of  such  things  in  action,  nor  at  the  time  pay  any  part 
of  the  purchase  money." 
Opinion  No.  65. 


60 

USING  CHECKS   MARKED   "IN   FULL   SETTLEMENT.' 

In  connection  with  several  claims  recently  handled  by  our  Col- 
lection Department  in  Pennsylvania  and  the  question  of  using  checks 
marked  "in  full  settlement"  or  "in  settlement  of  all  demands  to 
date,"  we  have  the  following  communication  from  a  prominent 
attorney  in  Pennsylvania: 

"I  desire  to  state  that  it  is  elementary  law  that  if  pending  the 
adjustment  of  a  disputed  claim,  the  debtor  sends  the  money  to  his 
creditor  in  full  payment  of  the  demand,  the  latter  cannot  receive 
and  retain  it  as  a  credit  upon  a  larger  sum  claimed  by  him,  without 
discharging  the  debtor  as  to  the  whole. 

"123  Pa.,  p.  576.     147  Pa.,  p.  607.    70  Pa.,  p.  315. 

"These  cases  have  been  decided  by  the  Supreme  Court  of  Penn- 
sylvania, the  court  of  the  last  resort.  Therefore  it  does  not  lie  in 
the  province  of  your  members  to  cancel  the  words  'in  full  settlement' 
without  destroying  their  right  in  respect  to  prevailing  for  the  balance. 

"I  might  further  state  that  in  the  absence  of  any  dispute  in 
respect  to  any  claim,  the  payment  of  a  smaller  amount  will  not 
operate  to  discharge  the  whole,  because  there  is  no  accord  and 
satisfaction;  the  absence  of  any  dispute  in  respect  to  the  amount 
being  the  material  circumstances  in  this  regard." 
Opinion  No.  66. 


A  CUSTOMER  BUYING  ON  CREDIT  MUST  KEEP  HIS 

CREDIT  GOOD. 

Question. — If  a  bill  of  lumber  is  sold  on  credit  and  before  deliv- 
ery to  the  customer  the  seller  considers  he  has  good  reason  to 
question  the  purchaser's  ability  to  settle  when  the  bill  is  due,  can 
the  seller  withhold  the  delivery  and  demand  either  better  terms  or 
cash  without  making  him  liable  for  the  non-fulfillment  of  the 
contract  ? 

Reply:  A  man  who  has  bought  goods  on  credit  is 
bound,  as  the  courts  phrase  it,  "to  keep  his  credit  good." 
If  he  does  not  do  that  the  seller  need  not  ship  the  goods; 
if  he  has  shipped  them  and  then  finds  that  the  buyer  has  not 
kept  his  credit  good,  he  may  stop  the  goods  and  take  them 
back  into  his  own  possession  at  any  time  before  they  have 
actually  been  delivered  to  the  buyer  or  his  agent.  In  mak- 
ing his  decision  the  seller  must,  of  course,  take  his  own 
risks.  He  has  entered  into  a  contract  and  he  must  fulfill 
it  or  pay  the  resulting  damages  unless  he  has  a  legal  excuse 
for  refusing  to  go  on  with  it.  It  is  not  sufficient  that,  as 


61 

the  question  says,  "the  seller  considers  he  has  good  reason 
to  question  the  purchaser's  ability  to  settle";  nor  that  the 
seller  has  good  grounds  for  believing  that  the  buyer's  credit 
is  impaired.  It  is  not  a  question  of  any  man's  belief,  but 
a  question  of  fact.  The  goods  must  be  shipped  unless  the 
buyer  is  actually  insolvent.  This  does  not  mean  that  he 
must  have  made  an  assignment  or  gone  into  bankruptcy  or 
made  any  other  public  acknowledgment  of  the  fact  that  he  is 
insolvent.  It  means  he  has  become  unable  to  pay  his  debts 
as  they  fall  due.  The  seller  must  be  able  to  show  that  at 
least  one  debt  has  fallen  due  against  the  buyer  and  that  he 
has  not  paid  it  promptly.  Of  course,  it  must  be  a  debt  the 
validity  of  which  the  buyer  himself  does  not  dispute  upon 
any  tenable  ground.  If  he  has  paid  his  debts  as  they  fell 
due  he  has  "kept  his  credit  good,"  no  matter  what  any  one 
may  suspect  as  to  the  future;  if  he  has  failed  to  pay  any 
just  debt  promptly  he  has  not  kept  his  credit  good.  If  the 
seller  has  no  right  to  refuse  delivery  of  the  goods  altogether 
he  has  no  right  to  demand  better  terms  than  his  contract 
gives  him. 
Opinion  No.  67. 


DISCOUNT    MUST   BE   IN    ACCORDANCE    WITH    THE 

CONTRACT. 

Question. — We  sold  to  a  concern  and  the  terms  of  sale  were 
"2  per  cent,  discount  for  cash  in  ten  days  or  sixty  days  net."  The 
buyer  in  his  settlements  has  taken  fifteen  to  twenty  days'  time  and 
has  deducted  2  per  cent,  discount  and  has  added  6  per  cent,  per 
annum  for  the  extra  days  beyond  ten.  We  claim  that  this  settle- 
ment is  entirely  wrong,  and  if  he  wishes  the  discount  in  full  he 
must  send  a  check  within  ten  days  after  the  date  of  the  bill. 

Reply :  No  debtor  is  to  be  excused  from  paying  the  full 
amount  of  his  debt  except  in  strict  accordance  with  some 
provision  to  that  effect  in  his  contract.  Here  is  a  debtor  who 
would  have  been  bound  to  pay  the  full  amount  immediately 
if  there  had  been  no  special  provision  to  the  contrary.  Any 
such  provision  as  there  may  be  is  a  kind  of  grace  to  him 
and  it  is  not  to  be  extended  beyond  the  strict  terms  in  which 
it  is  expressed.  He  may  take  2  per  cent,  off  if  he  pays  at 
any  time  within  ten  days.  When  the  ten  days  are  passed 
the  contract  stands  precisely  as  if  it  had  said  nothing  at 
all  about  discount  for  payment  within  ten  days.  This  debtor 
had  no  right  to  deduct  the  2  per  cent.  He  is  trying  to  take 
an  advantage  which  his  contract  does  not  give  him.  If  he 


62 

were  asked  to  point  out  a  clause  in  the  contract  giving  him 
a  right  to  take  off  the  discount  later  than  the  tenth  day, 
of  course,  he  could  not  do  it. 
Opinion  No.  69. 


A  BILL  OF  LADING  TO  ORDER  RETAINS  TITLE  TO 

THE  GOODS. 

Question. — If  a  shipper  sells  a  carload  of  lumber  f.  o.  b.  ship- 
ping point  with  draft  attached  to  bill  of  lading  and  bills  the  car 
to  his  own  order,  notify  the  purchaser,  and  if  the  car  should  be 
wrecked  in  transit  or  should  never  reach  its  proper  destination, 
would  the  buyer  who  bought  the  car  f.  o.  b.  be  compelled  to  pay 
the  draft  and  take  up  the  bill  of  lading  and  seek  recourse  against 
the  carriers?  Should  the  shipper  bill  a  car  to  the  order  of  a  bank, 
notify  the  f.  o.  b.  purchaser  and  sell  the  draft  and  bill  of  lading 
to  the  bank  outright,  would  the  purchaser  be  compelled  to  pay  for 
same? 

Reply:  When  a  sale  is  made  f.  o.  b.  shipping  point  the 
seller  can  make  a  valid  delivery  at  that  point.  If  he  delivers 
the  goods  to  a  carrier  there,  takes  a  bill  of  lading  making 
them  deliverable  to  the  buyer  and  forwards  it  to  the  latter, 
his  full  duty  is  done  and  the  goods  are  at  that  moment,  in 
legal  effect,  delivered  to  the  buyer;  they  are  actually  deliv- 
ered to  the  buyer's  agent,  the  carrier,  and  that  is  equivalent 
to  a  delivery  to  the  buyer  himself.  This  is  the  kind  of  deliv- 
ery the  seller  is  at  liberty  to  make,  under  the  contract,  but 
he  may  not  do  so.  He  might,  conceivably,  carry  the  goods 
in  his  own  arms  to  the  buyer,  or  he  may  deliver  them  to  one 
who  is  unquestionably  his  own  agent.  In  either  of  these 
cases  delivery  to  the  buyer  does  not  occur  until  the  goods 
reach  their  destination.  If  A  ships  goods  to  the  place  in 
which  B  resides  and  takes  the  bill  of  lading  to  his  own  order 
the  goods  are  not  in  any  sense  delivered  to  B  or  to  his  agent. 
They  are  A's  goods.  He  can  stop  them  where  he  will  and 
take  them  back  into  his  own  possession.  When  they  reach 
their  destination  he  can  take  charge  of  them  or  have  them 
delivered  to  anyone  he  may  choose  to  name.  Those  goods 
could  be  seized  by  a  creditor  of  the  seller  and  they  could 
not  be  seized  by  a  creditor  of  the  buyer.  If  they  are  lost 
in  transit  it  is  the  seller's  loss.  A  seller  must  either  deliver 
the  goods  or  retain  them.  He  cannot  do  both.  He  cannot 
deliver  them  so  as  to  make  the  buyer  liable  in  case  of  loss 
and  still  retain  them  so  that  they  will  be  his,  to  do  with  as 
he  will  if  there  is  no  loss.  The  same  result  follows  if  the 


63 

bill  of  lading  is  sold  to  a  bank.  A  bill  of  lading  represents 
goods  in  transit  and  transfer  of  the  bill  transfers  the  goods. 
The  direction  to  the  carrier  to  "notify"  one  person  or  an- 
other is  of  no  importance.  Goods  may  be  consigned  to  B 
and  the  carrier,  for  one  reason  or  another  or  for  no  reason 
at  all,  may  be  directed  to  "notify"  X  or  Y  or  Z  of  the  fact 
that  they  have  arrived.  Notification  is  not  to  be  substituted 
for  delivery. 

Opinion  No.  70. 


ONE  WHO  BUYS  ON  CREDIT  MUST  KEEP  HIS  CREDIT 

GOOD. 

Question. — A,  in  New  York,  has  with  B,  a  manufacturer,  three 
separate  contracts  made  in  December,  February  and  March,  re- 
spectively, each  contract  specifying  the  grade  and  price  of  material, 
date  of  delivery  and  terms  of  payment.  The  deliveries  called  for 
in  the  December  contract  have  been  completed  by  A;  the  date  for 
the  first  delivery  of  the  February  contract  is  due  this  month;  but 
B  is  overdue  30  days  on  his  payment  on  the  first  delivery  of  the 
December  contract  and  payment  on  the  delivery  of  balance  of  the 
December  contract  is  now  due.  Because  B  has  failed  to  comply 
on  his  part  with  the  conditions  of  the  first  contract,  must  A  deliver 
the  material  according  to  the  terms  of  the  second  and  third  con- 
tracts, thereby  unduly  increasing  the  amount  of  credit  extended  to 
B  beyond  his  general  credit  limit?  From  information  obtained 
which  would  lead  A  to  question  the  credit  of  B,  such  as  his  taking 
a  contract  at  a  loss  (this  occurring  since  the  contracts  were  made) 
can  A  demand  payment  before  delivery  of  the  goods,  although 
the  contract  specifies  30  days  from  certain  dates?  Can  A  cancel 
the  two  uncompleted  contracts  for  any  of  the  above  reasons,  viz., 
ncn-fulfillment  of  the  condition  of  the  first  contract  by  B  or  doubt 
as  to  B's  credit?  If  cancelled  by  A  would  B  have  any  legal  redress 
such  as  buying  the  quantity  and  grade  of  material  stipulated  by 
the  contracts  in  the  open  market  and  compelling  A  to  pay  the  differ- 
ence in  price  should  the  present  market  price  be  higher  than  the 
prices  stipulated  in  the  contracts? 

Reply:  When  a  man  buys  goods  on  credit  it  is  always 
an  implied  condition  of  the  contract  that  he  shall  "keep  his 
credit  good,"  as  the  courts  phrase  it,  till  the  time  of  delivery 
arrives.  If  he  becomes  insolvent  before  that  time  he  cannot 
demand  that  the  seller  shall  ship  the  goods.  If  the  seller 


64 

does  ship  them,  and  then  learns  of  the  insolvency,  he  may 
stop  the  goods  before  they  reach  the  buyer  and  take  them 
back  into  his  own  possession.  A  buyer  on  credit  has  no 
right  to  demand  that  the  goods  shall  be  delivered  to  him  at 
a  time  when  he  is  insolvent  and  when  there  is  reason  to 
believe,  accordingly,  that  the  goods  may  have  to  be  sold  to 
pay  his  other  debts.  That  is  the  situation  in  the  case  our 
correspondent  puts,  and  the  seller  is  certainly  not  bound  to 
deliver  the  merchandise.  By  insolvency,  in  a  case  of  this 
kind,  is  not  meant  an  actual  assignment  for  creditors ;  neither 
does  it  mean  that  the  buyer  has  gone  into  bankruptcy  or 
made  any  other  public  acknowledgment  of  the  fact  that  he 
is  insolvent.  It  means  that  he  has  become  unable  to  pay  his 
debts  as  they  fall  due.  The  seller  must  be  able  to  show  that 
at  least  one  debt  has  fallen  due  against  the  buyer  and  that 
he  has  not  paid  it  promptly.  Of  course,  it  must  be  a  debt 
the  validity  of  which  the  buyer  himself  does  not  dispute  upon 
any  tenable  or  reasonable  ground.  The  buyer  in  this  case 
has  failed  to  pay  such  a  debt.  The  seller  has  ample  proof 
of  the  fact  because  the  debt  was  owing  to  him.  The  buyer 
has  not  "kept  his  credit  good,"  and  he  has  no  right  to 
demand  that  goods  sold  to  him  on  credit  shall  be  delivered. 
If  they  are  not  delivered  he  will  have  no  legal  ground  of 
complaint  or  cause  of  action  against  the  seller.  It  is  not  the 
seller  who  is  guilty  of  a  breach  of  contract,  but  the  buyer ; 
he  is  guilty  of  a  breach  of  the  implied  condition  which  enters 
into  all  such  contracts — the  condition  that  the  buyer  shall 
"keep  his  credit  good." 
Opinion  No.  71. 

A  SELLER  IS  BOUND  BY  HIS  OWN  MISTAKE  UNLESS 
IT  IS  OBVIOUS. 

Question. — We  sent  an  inquiry  for  certain  sizes  of  lumber  to 
a  mill  asking  for  quotations.  Our  inquiry  was  delayed  in  the  mails, 
and,  as  it  did  not  reach  the  mill  in  time  enough  to  quote  we  placed 
the  order  with  the  mill,  but  did  not  specify  prices.  The  mill 
acknowledged  our  order,  saying,  "We  have  entered  your  order  as 
per  enclosed  carbon,"  and  after  each  item  they  named  a  price.  The 
lumber  was  shipped  and  an  invoice  sent  us,  but  on  two  of  the 
items  a  larger  amount  is  charged  than  specified  in  the  communica- 
tion from  the  mill,  saying  our  order  had  been  entered.  In  remitting 
we  deducted  the  difference  between  the  prices  mentioned  in  reply 
from  the  mill  and  the  invoice,  but  the  mill  claims  they  made  a 
clerical  error  and  that  we  are  bound  to  pay  the  invoice  price.  What 
is  our  position  in  the  matter? 


65 

Reply:  When  a  seller  puts  a  price  on  his  goods  and  the 
buyer  accepts  them  at  that  price  it  is  then  too  late  for  the 
seller  to  demand  more  except  in  the  following  case:  If  the 
buyer  knew  that  a  mistake  had  been  made,  or  if  the  mis- 
take was  so  gross  and  palpable  that  he  ought  to  have  known 
it  to  be  a  mistake,  then  it  may  be  corrected.  If  a  seller  were 
to  quote  $1.25  when  all  buyers  knew  that  $12.50  was  about 
the  market  price,  the  buyer  would  not  be  allowed  to  claim 
the  goods  at  the  quotation  without  making  special  inquiry  as 
to  its  accuracy;  if  the  quotation  was  only  slightly  under  the 
market,  so  that  no  suspicion  attached  to  it,  and  if  there  was 
nothing  else  to  show  that  a  mistake  had  been  made,  and  if 
the  buyer  had  no  actual  knowledge  of  the  fact,  the  seller 
is  bound.  Taking  the  whole  class  of  sellers  together,  it 
would  not  be  a  safe  rule  to  allow  them  to  come  around  and 
collect  more  after  a  sale  had  been  made  and  concluded  upon 
the  plea  that  they  had  not  asked  as  much  as  they  intended 
to  ask. 
Opinion  No.  72. 


A  CARRIER  SHOULD  PAY  VALUE  AT  DESTINATION 
FOR  LUMBER  LOST. 

Question. — On  what  basis  must  a  railroad  company  settle  a 
claim  by  a  consignee  on  lumber  damaged  or  lost?  Must  the  con- 
signee supply  the  original  invoices,  or  is  he  entitled  to  the  selling 
price  in  his  market? 

Reply:  If  the  contract  does  not  provide  otherwise,  a 
carrier  who  fails  to  deliver  goods  must,  as  a  rule,  pay  to  the 
consignee  the  value  of  the  goods  at  the  time  and  place  at 
which  delivery  should  have  been  made.  The  carrier  is  to 
retain  his  freight  charges  out  of  this  amount,  of  course,  if 
freight  has  not  been  paid  in  advance.  This  is  the  only  rule 
by  which  the  whole  of  the  loss  can  be  placed  upon  the  car- 
rier, where  it  belongs.  If  he  had  done  his  duty  and  delivered 
the  goods  the  consignee  could  have  sold  them  at  the  prices 
there  and  then  prevailing.  If  the  carrier  pays  the  consignee 
less  than  this  amount  the  consignee  himself  must  bear  part  of 
the  burden  of  the  carrier's  negligence.  Of  course,  if  the 
contract  provides  that  settlement  shall  be  upon  some  other 
basis,  original  cost,  for  example,  the  contract  will  be  enforced. 
The  only  other  exception  to  the  rule  is  that  which  arises  when 
the  goods  have  already  been  sold  for  an  amount  which  is 
not  so  great  as  the  market  price  at  the  place  and  time  at 
which  delivery  ought  to  have  been  made.  If  delivery  had 
been  duly  made,  in  such  a  case  the  owner  of  the  goods 


66 

could  not  have  taken  advantage  of  ruling  market  prices;  he 
had  already  bound  himself  to  deliver  the  goods  at  a  price 
which  proves  to  be  less  than  the  market  on  the  day  fixed  for 
delivery,  and  this  selling  price  is  all  that  he  can  claim.  The 
object  in  every  case,  except  where  there  has  been  a  special 
contract  of  carriage,  is  to  place  the  owner  of  the  goods  as 
nearly  as  possible  in  the  same  position  he  would  have  occu- 
pied if  the  carrier  had  done  his  duty  and  to  put  upon  the 
carrier,  where  it  belongs,  the  whole  burden  of  his  negligence 
and  breach  of  contract. 
Opinion  No.  73. 


LIABILITY  OF  SHIPPER  WHERE  PART  OF  SHIPMENT 
IS  ADMITTED  BELOW  GRADE. 

Question. — I  received  from  a  customer  an  order  for  a  carload 
of  lumber  of  a  certain  grade.  A  fair  sized  car  would  be  14,000 
feet.  The  car  arrives  and  2,000  feet  of  the  lumber  is  admitted  by 
me  to  be  of  a  grade  lower  than  the  order  called  for.  Can  I  com- 
pel my  customer  to  accept  the  balance  of  12,000  feet,  which  is  up 
to  the  requirements  of  the  order?  He  claims  that  inasmuch  as  the 
car  I  have  offered  is  not  all  up  to  grade,  I  cannot  compel  him  to 
accept  even  so  large  'a  proportion  as  12,000  feet,  notwithstanding 
the  fact  that  12,000  feet  will  still  be  a  pretty  fair  sized  car  of 
lumber. 

Reply :  According  to  this  statement  the  shipper  under- 
took to  carry  out  an  order  and  deliver  a  carload  of  lum- 
ber. According  to  the  admission  2,000  feet  of  the  carload 
were  contrary  to  the  terms  of  the  contract.  Under  the  cir- 
cumstances a  carload  of  lumber  has  not  been  delivered 
and  we  doubt  very  much  if  you  can  find  a  way  to  compel 
acceptance  of  a  carload  of  lumber  that  is  admitted  on  the 
face  of  it  as  not  being  strictly  according  to  the  terms  of 
the  contract. 
Opinion  No.  76. 

NECESSITY    OF    FOREIGN    CORPORATIONS    FILING 
CERTIFICATES. 

The  Association  has  made  some  inquiry  regarding  the  necessity 
of  so-called  foreign  corporations  filing  certificates  in  States  othei 
than  those  under  whose  laws  the  corporation  was  organized.  If 
any  corporate  members  are  interested  and  desire  information  along 
these  lines  we  shall  be  pleased  to  render  such  assistance  as  we  can. 


67 

In  some  States  the  requirements  are  strict,  and  recently  some 
Western  States,  particularly  Oklahoma,  have  enacted  legislation  of 
much  importance  to  foreign  corporations  shipping  into  those  States. 
Opinion  No.  77. 


COURSE   TO   PURSUE   WHEN   LUMBER   IS   REFUSED 

ON  ARRIVAL. 

Question. — We  took  an  order  from  a  customer  for  a  carload  of 
lumber  to  be  shipped  not  later  than  September  I5th.  The  car  was 
shipped  within  the  specified  time  but  did  not  reach  destination  as 
promptly  as  it  should,  and  our  customer  claims  that  he  has  been 
damaged  to  such  an  extent  that  he  refuses  to  take  in  the  car,  saying 
it  arrived  too  late  for  his  use.  The  lumber  is  exactly  in  accord- 
ance with  the  order  and  is  a  special  worked  car.  We  will  be  put 
to  some  expense  in  disposing  of  this  elsewhere  and  will  probably 
have  to  sell  it  at  a  lower  price.  What  method  should  we  pursue? 
Reply:  There  are  three  courses: 

First:  The  shipper  may  store  the  lumber  for  the  buyer 
and  sue  him  for  the  invoice  price. 

Second:  He  may  retain  the  property  as  his  own  and 
recover  the  difference  between  the  market  price  at  the  time 
and  place  of  delivery  and  the  contract  price. 

Third:  He  may  sell  the  lumber,  acting  as  the  agent  for 
the  purchaser  and  recover  the  difference  between  the  con- 
tract and  the  price  of  resale. 

This  last  course  is  usually  considered  best  because  it 
gives  the  seller  the  use  of  the  money  realized  on  the  resale. 
Of  course  in  reselling  the  lumber  care  must  be  taken  to 
obtain  the  best  possible  price,  and  in  the  event  of  the  resale 
the  seller  is  entitled  to  recovery  from  the  purchaser  of  all  the 
costs  which  he  was  obliged  to  lay  out  in  bringing  to  pass  a 
sale  of  the  property  in  question. 
Opinion  No.  78. 

A  CARRIER  MUST  STOP  GOODS  IN  TRANSIT  IF  PROP- 
ERLY ORDERED  TO  DO  SO. 

Question. — A  makes  a  shipment  to  a  customer  in  another  State 
and  several  days  after  he  receives  information  that  leads  him  to 
believe  it  prudent  to  hold  up  the  shipment  and  have  the  goods 
reconsigned  to  himself.  He  immediately  takes  the  matter  up  with 


68 

the  initial  carriers  with  the  request  that  they  take  immediate  steps 
to  stop  the  shipment  in  transit  and  have  same  reconsigned  to  him- 
self, all  charges  to  follow.  In  the  event  that  the  initial  carrier  fails 
to  take  prompt  action  and  it  develops  that  the  goods  are  delivered 
after  the  initial  carrier  has  been  notified  not  to  deliver  them,  thereby 
causing  A  the  loss  of  the  value  of  the  shipment,  cannot  A  hold  the 
initial  carrier  responsible  for  the  value  of  the  shipment? 

Reply:  When  goods  are  sold  on  credit  and  the  buyer 
becomes  insolvent  or  gives  proof  of  insolvency,  before  the 
goods  are  delivered  to  him,  it  is  the  right  of  the  seller  to 
take  them  back  into  his  own  possession  and  refuse  delivery 
altogether;  this  is  because  one  who  buys  on  credit  is  bound 
by  an  implied  contract  that  he  will  keep  his  credit  good  and 
be  able  to  pay  for  the  goods  when  the  due  date  arrives. 
When  the  carrier  is  called  upon  to  return  the  goods  to  the 
seller  he  must  act  at  his  own  peril.  If  he  does  return  them 
and  the  buyer  was  not  insolvent,  the  carrier  must  answer  to 
the  buyer  for  his  damages.  On  the  other  hand,  if  the  carrier 
fails  to  return  the  goods  and  the  seller  can  show  that  the 
buyer  was  insolvent  the  carrier  must  respond  to  the  seller  for 
the  value  of  the  goods  or  for  such  part  of  it  as  the  seller 
finally  loses.  The  seller,  in  the  case  under  consideration, 
must  first  establish  the  fact  that  he  had  a  right,  within  these 
rules,  to  stop  the  goods.  Then  if  he  can  show  also  that  this 
might  have  been  done  except  for  negligence  or  delay  on  the 
part  of  the  initial  carrier,  he  can  hold  that  carrier  liable  for 
his  loss. 
Opinion  No.  79. 

ACCORD  AND  SATISFACTION. 

Frequently  inquiries  are  sent  us  inquiring  as  to  the  advisability 
of  accepting  checks  marked  "In  full  settlement  of  account  to  date," 
etc.  The  situation  is  not  the  same  in  all  States  but  usually  the 
questions  are  covered  in  the  doctrine  of  accord  and  satisfaction 
explained  as  follows: 

If  an  account  between  two  parties  be  actively  and  openly  in 
dispute  and  the  debtor  sends  to  his  creditor  a  remittance  for  a 
specific  sum  and  states  that  such  sum  is  offered  in  full  settlement, 
and  if  such  sum  be  accepted  by  the  creditor  he  is  bound  thereby  and 
cannot  thereafter  recover  anything  on  the  account  from  his  debtor. 
The  mere  sending  of  a  remittance,  however,  for  an  amount  less 
than  the  amount  due,  where  there  is  no  dispute  between  the  par- 
ties, does  not  affect  the  right  of  the  creditor  to  bring  suit  for  the 
balance  due  even  though  it  is  stated  in  the  letter  accompanying  the 
remittance  that  said  remittance  is  in  full  settlement. 


09 

The  question  as  to  whether  a  dispute  is  open  or  active  can 
usually  be  easily  determined.  If  the  seller  and  buyer  have  been  in 
correspondence  regarding  a  dispute,  that  determines  its  activity, 
and  if  after  such  correspondence  a  remittance  is  made  marked  "In 
full  settlement,"  etc.,  the  acceptance  is  binding. 
Opinion  No.  80. 


ACCEPTANCE  IN   NEW  JERSEY   MAY   BE  AFFECTED 

BY  STATUTE. 

Our  attention  has  been  called  to  a  law  passed  by  the  New  Jersey 
Legislature  in  1907,  from  which  the  following  is  quoted: 

"Where  the  seller  delivers  to  the  buyer  the  goods  he  contracted 
to  sell  mixed  with  goods  of  a  different  description  not  included  in 
the  contract,  the  buyer  may  accept  the  goods  which  are  in  accord- 
ance with  the  contract  and  reject  the  rest,  or  he  may  reject  the 
whole." 

We  are  receiving  inquiries  as  to  the  responsibility  of  a  customer 
where  he  had  used  part  of  a  shipment  of  lumber  of  one  description, 
the  customer  claiming  the  statute  above  quoted  permitted  him  to 
use  such  of  the  shipment  as  was  up  to  grade  and  reject  the  balance. 
Commenting  on  the  law  above  referred  to  where  a  shipment  con- 
tains lumber  under  one  description  it  would  seem  to  be  the  law 
that  if  the  consignor  delivers  to  the  consignee  the  goods  contracted 
for  of  the  same  description  included  in  the  contract,  the  debtor, 
with  his  right  of  inspection  must  either  reject  or  accept,  and  if  the 
consignee  does  any  act  by  which  it  could  be  inferred  that  he  is  exer- 
cising the  right  of  ownership  of  any  part  of  the  merchandise  so 
shipped  and  delivered,  we  believe  he  is  liable  for  the  entire  amount 
of  lumber  shipped  and  received.  He  cannot  take  out  what  he  wants 
of  the  order  and  reject  the  balance. 

The  New  Jersey  law  covers  mixed  shipments,  for  instance,  in 
a  shipment  of  barn  boards,  siding  and  moulding,  the  buyer  would 
have  the  right  to  accept  either  of  these  items  without  prejudicing 
his  claim,  or  waiving  his  privilege  of  rejection  on  the  other  two, 
but  where  a  straight  car  of  barn  boards  is  ordered  the  buyer  is  not 
privileged  to  use  a  portion  of  them  and  reject  the  balance  as  not 
being  up  to  contract. 
Opinion  No.  81. 


CONDITIONAL     CLAUSES     REGARDING     TERMS     ON 
LETTERHEADS,  INVOICES,  ETC. 

It  seems  again  necessary  to  call  the  attention  of  our  members 
to  the  custom  of  printing  a  clause  on  the  top  of  letter-heads  used 


70 

for  quotation  to  the  effect  that  agreements  or  contracts  are  con- 
tingent upon  strikes,  accident,  other  causes,  etc.  It  frequently  hap- 
pens that  this  clause  is  so  printed  on  the  letter-head  or  quotation 
form  as  not  to  make  it  a  part  of  the  contract,  and  the  following 
attorney's  opinion  is  pertinent: 

When  a  man  has  a  proposal  to  make  to  another  in  writing  he 
begins,  usually  and  naturally,  with  the  name  of  the  place  from 
which  he  writes  and  the  date.  Then  he  makes  his  proposal  and 
closes  by  signing  his  name.  The  paper  upon  which  he  writes  may 
have  printed  at  the  top  or  somewhere  in  the  margin  the  name  and 
address  of  the  firm;  the  telephone  number  and  the  number  of  the 
firm's  post  office  box;  the  cable  address;  a  list  of  five  or  six  cable 
codes  used  by  the  concern  ;  names  of  the  various  articles  in  which 
it  deals  ;  facsimiles  of  some  of  its  trade-marks ;  pictures  of  certain 
gold  medals  that  have  been  awarded  to  its  goods  at  fairs  of  one 
sort  or  another.  Frequently  there  is  much  other  matter.  There 
may  also  be  something  to  the  effect  that  agreements  are  contingent 
upon  strikes.  Of  course,  the  person  to  whom  the  proposition  is 
addressed  is  not  concerned  with  any  of  these  things.  What  he  has 
to  read  and  consider  is  the  matter  found  between  the  address  and 
the  signature,  and  nothing  more.  That  is  the  reasonable  interpre- 
tation of  the  matter,  and,  is,  very  naturally,  the  view  that  the  courts 
have  taken  of  it.  In  153  111.,  102,  to  quote  only  one  case,  the 
Supreme  Court  of  Illinois  decided  that  "the  words  'all  sales  subject 
to  strikes  and  accidents,'  printed  as  part  of  the  letter-head  of  a 
reply,  do  not  form  any  part  of  the  contract."  No  court  could  very 
well  reach  any  other  conclusion,  so  far  as  we  can  ascertain,  and  no 
court  has  done  so. 

In  the  same  manner  a  postscript  on  a  letter  or  quotation  blank 
is  not  an  actual  part  of  the  contract  unless  it  is  signed. 

Other  members  have  also  attempted  to  enforce  terms  printed 
on  their  invoices  where  such  terms  were  not  referred  to  in  the 
original  order  or  contract  of  sale.  The  following  opinion  will  be 
helpful  in  such  matters: 

The  question  of  the  invoice  may  be  settled  with  little  difficulty. 
Nothing  upon  the  invoice  is  binding  upon  the  buyer,  whether  it 
is  written  or  printed  and  whether  it  stands  in  the  body  of  the  docu- 
ment or  in  the  margin.  A  contract  is  made  by  two  persons,  and 
it  is  binding  only  in  so  far  as  both  have  agreed  to  be  bound  by  it. 
An  invoice  is  made,  after  all  the  terms  of  the  contract  have  been 
irrevocably  fixed,  and  it  is  made  by  only  one  person.  The  seller 
would  have  things  very  much  his  own  way  if  he  could  go  off  alone, 
after  a  contract  had  been  made,  and  alter  or  amend  or  limit  or  ex- 
plain it  by  his  own  act.  He  has  no  such  power,  of  course,  and  he 
cannot  put  anything  upon  his  invoice  in  writing  or  in  print,  that 
will  bind  the  buyer. 
Opinion  No.  82. 


71 

INTERPRETATION  OF  "REASONABLE  TIME,"  "DUE 

NOTICE,"  ETC. 

Frequently  our  members  ask  what  constitutes  shipment  within  a 
reasonable  time,  or  what  is  the  meaning  of  "due  notice,"  etc. 

The  courts  are  always  careful  not  to  give  any  general  defini- 
tion of  such  words  as  "due,"  "reasonable"  and  the  like.  What  is 
due  or  reasonable  notice  in  one  case  might  not  be  so  in  another ;  and 
each  case  is  made  to  stand  on  its  own  facts.  "Due  notice,"  in  one 
case  or  in  any  other,  is  such  notice  as,  all  of  the  circumstances  and 
conditions  being  duly  considered,  would  permit  the  person  receiv- 
ing the  notice  to  do  that  which  was  required  of  him.  Evidence  is 
to  be  presented,  on  the  one  side,  and  on  the  other,  to  show  whether 
due  notice,  within  this  definition,  was  or  was  not  given.  Due  notice 
is  sufficient  notice,  and  that  which  is  sufficient  in  one  case  may  be 
too  much  or  too  little  in  another. 
Opinion  No.  83. 


IF  SHIPMENTS  ARE  NOT  TENDERED  IN  TIME  THE 
BUYER  NEED  NOT  TAKE  THEM. 

Question. — In  December,  1909,  we  placed  an  order  for  nine  cars 
of  lumber  to  be  delivered  in  March,  1910.  Part  of  the  shipment 
was  made  in  February  and  March,  leaving  about  a  third  unshipped 
on  the  first  of  April.  We  wrote  the  sellers  to  cancel  the  order. 
They  object  to  this  cancellation,  saying  that  the  delay  was  caused 
by  a  breakdown  of  their  mill  which  was  unavoidable  and  say  for 
this  reason  the  order  is  in  force,  as  they  are  ready  to  make  delivery 
of  the  balance  of  the  goods  to-day,  April  7th,  one  week  after  the 
contract  date  expired.  Have  we  a  legal  right  to  cancel  under  these 
conditions  ? 

Reply:  The  man  who  runs  a  mill  is  entitled  to  all  the 
profit  he  can  make  from  it;  but  if  there  is  an  interruption  of 
the  running  it  is  he  who  must  stand  the  loss.  He  cannot  ask 
a  customer  to  wait  for  goods,  at  his  own  expense  and  incon- 
venience, until  it  may  be  found  practicable  and  advisable  to 
start  up  the  works  again.  The  buyers  may  refuse  to  accept 
the  belated  delivery,  in  the  case  our  correspondent  puts,  and 
may  demand  damages  for  the  sellers'  breach  of  contract. 
If  a  breakdown  of  the  mill  is  to  excuse  the  seller  the  contract 
of  the  sale  must  contain  an  explicit  stipulation  to  that  effect. 
Opinion  No.  84. 


72 

WHEN  A  BUYER  ACCEPTS  A  SHIPMENT,  A  WRITTEN 
CONTRACT  IS  NOT  NECESSARY. 

Question. — A  customer  called  at  our  yards  and  arranged  to 
buy  six  cars  of  lumber,  asking  that  one  car  be  shipped  at  once.  He 
took  this  car,  but  refuses  to  order  the  balance  out  as  per  agreement. 
He  offers  to  pay  for  what  he  has  already  had,  but  he  says  we  can- 
not hold  him  for  any  more  because  the  contract  was  not  in  writing. 
Is  he  right? 

Reply:  This  buyer  can  be  held  for  the  value  of  the  six 
cars.  A  written  contract  or  memorandum  is  not  necessary 
where  part  of  the  goods  have  been  delivered  and  accepted. 
There  are  three  ways  in  which  a  sale  of  goods  for  $50  or 
more  may  be  made  valid  and  binding:  (i)  By  a  written 
contract  or  memorandum;  (2)  by  delivery  and  acceptance  of 
part  of  the  goods;  (3)  by  payment  of  part  of  the  purchase 
price.  Thus  a  buyer  sometimes  pays  a  small  part  of  the 
price  at  the  time  of  the  agreement,  "to  bind  the  bargain," 
as  he  says,  and  it  has  that  effect. 
Opinion  No.  86. 


IT   IS   TOO   LATE   TO    CLAIM    DAMAGE    FOR   DELAY 
IN  SHIPMENT  WHEN  LUMBER  IS  ACCEPTED. 

Question. — We  took  an  order  from  a  customer  for  ten  cars  of 
lumber  to  be  shipped  one  car  every  two  weeks.  The  first  three  cars 
were  shipped  on  time,  but  there  was  a  lapse  of  four  weeks  before 
the  fourth  car  got  out  and  weather  at  the  mill  delayed  our  getting 
the  balance  out  as  per  agreement,  although  we  finally  got  off  all 
the  cars.  When  the  delayed  shipments  began  to  arrive  our  cus- 
tomer complained  of  the  delay,  and  said  he  would  charge  us  back 
with  any  cost  he  had  to  allow  his  customer.  We  objected,  but 
our  customer  said  we  agreed  to  time  deliveries,  and  would  hold  us 
to  same.  He  took  in  all  the  shipments,  but  now  wants  to  charge 
us  with  a  loss  he  claimed  he  allowed  his  customer. 

Reply :  If  the  lumber  was  offered  to  the  buyer  at  a  time 
later  than  any  date  agreed  upon  at  time  of  sale,  the  buyer 
could  have  refused  to  accept  it,  and  would  have  had  a  claim 
against  the  seller  for  damages  occasioned  by  the  delay.  On 
the  other  hand,  the  buyer  might  accept  the  goods,  notwith- 
standing the  delay,  if  he  chose  to  do  so.  He  had  no  option 
except  one  of  these  two,  accept  the  goods  and  pay  for  them, 
or  reject  them  as  not  having  been  sent  in  time  to  constitute 
a  fulfillment  of  his  order.  He  could  not  accept  the  goods  at 


73 

any  other  than  the  contract  price.  This  is  the  situation  in 
which  the  case  would  have  stood  if  there  had  been  no  cor- 
respondence between  the  ordering  of  the  goods  and  their  ship- 
ment. It  is  barely  possible  that  the  correspondence  may  con- 
tain some  modification  of  the  original  contract,  introduced 
into  it  by  mutual  consent,  which  would  give  the  buyer  the 
right  he  now  claims.  If  the  original  contract  was  allowed  to 
stand  as  made  then  the  buyer  has  mistaken  his  remedy  if 
he  ha'd  any  remedy  at  all.  The  goods  were  offered  in  ful- 
fillment of  the  contract.  He  could  accept  them  as  such,  or 
reject  them.  Having  rejected  them,  it  is  possible  that  he 
would  have  had  a  claim  against  the  seller  for  failure  to 
deliver  the  goods  in  time.  This  much,  however,  is  perfectly 
well  settled.  The  buyer  had  no  right  to  the  goods  at  all 
except  in  fulfillment  of  his  contract.  If  he  accepts  them,  the 
contract  is  fulfilled  and  he  cannot  turn  about  and  demand 
damages  because  it  is  not  so.  If  he  thinks  the  delivery  is  not 
a  good  one,  because  of  delay,  let  him  refuse  it  and  then 
say  that  the  contract  has  not  been  carried  out.  It  has  been 
or  it  has  not  been,  and  his  acceptance  of  the  goods  shows' 
that  it  has  been. 
Opinion  No.  87. 


NOTICE  TO  AN  AGENT  IS  NOTICE  TO  THE  PRINCIPAL 

Question. — A,  a  shipper  in  the  South,  ships  to  B,  in  New  York, 
a  carload  of  lumber  at  a  price  based  on  delivery  f .  o.  b.  New  York 
City.  The  material  is  offered  to  B  on  a  lighter  at  the  agreed  upon 
point  of  destination,  and  B,  on  inspecting1  it,  comes  to  the  conclusion 
that  it  is  not  what  he  ordered,  and  refuses  to  accept  it,  simply  tell- 
ing the  railroad  that  the  material  is  not  what  he  ordered,  and 
refuses  to  unload.  B  does  not  notify  the  shipper,  A,  and  the  latter 
knows  nothing  of  B's  rejection  or  refusal  to  accept  until  about  a 
month  later,  when  he  receives  a  notice  from  the  railroad  that  B 
has  rejected  the  material.  A  claims  that  B  should  have  notified 
him  immediately  by  mail  or  telegram  that  the  material  was  not 
what  he  ordered,  but  B  claims  that  he  was  not  compelled  to  do 
so  and  that  the  fact  that  the  railroad  did  not  notify  A  until  a  month 
after  was  no  concern  of  his.  Is  he  right? 

Reply :  There  is  no  rule  of  law  known  to  us  which  would 
have  required  the  buyer  to  notify  the  seller  of  his  determina- 
tion not  to  accept  the  goods  in  this  case.  If  the  buyer  had 
taken  the  goods  from  the  carrier  he  would  have  been  bound 
to  notify  the  seller  of  this  subsequent  rejection.  If  delivery 
had  been  made  at  the  shipping  point  instead  of  f.  o.  b.  des- 


74 

tination,  so  that  the  carrier  should  have  been  agent  of  the 
buyer  and  not  of  the  seller,  the  buyer's  duty  to  give  notice 
would  have  been  the  same.  As  the  case  actually  stands  it  is 
this :  The  seller  himself  or  his  agent,  which  amounts  to  the 
same  thing,  tenders  the  goods  to  the  buyer  and  the  buyer 
rejects  them  without  having  taken  them  into  his  custody. 
The  seller  or  his  agent  immediately  knows  that  they  are  re- 
jected. How  could  notice  add  anything  to  that  knowledge? 
If  it  is  the  seller's  agent  who  knows,  and  if  the  seller  him- 
self does  not  know,  that  is  because  the  seller  has  not  given 
proper  instructions  to  his  agent  or  because  the  agent  has 
failed  to  follow  them  if  they  were  given.  In  neither  case  is 
the  buyer  to  blame.  He  has  notified  the  seller's  agent  that 
the  goods  are  refused;  that  is  all  he  can  be  required  to  do. 
If  the  refusal  is  not  justified  the  seller  has  his  remedy,  of 
course.  If  it  was  justified  the  seller  has  sufficient  notice 
of  it.  Our  correspondent  says  the  seller  complains  because 
the  buyer  did  not  notify  him  "immediately  by  mail  or  tele- 
gram that  the  material  was  not  what  he  ordered."  That  is 
absurd  in  any  case.  The  seller  knew  as  well  as  the  buyer, 
and  knew  before  the  buyer  did  whether  the  goods  sent  were 
such  as  the  buyer  had  ordered  or  not.  Why  should  he 
be  notified  of  a  fact  that  he  knew  already. 
Opinion  No.  88. 

ASSESSMENT  OF  FOREIGN  CORPORATIONS. 

Inquiries  are  frequently  made  at  this  office  as  to  the  amount  of 
tax  which  a  foreign  corporation  must  pay  in  States  where  a  certi- 
ficate is  issued  to  such  foreign  corporations,  authorizing  them  to  do 
business  under  the  State  statutes.  In  computing  the  assessment  or 
tax  the  State  auditor  gets  his  information  from  the  reports  which 
ought  to  be  filed  annually.  The  amount  of  tax  assessed  is  predi- 
cated upon  the  amount  of  capital  actually  employed  within  the  State, 
and  if  no  capital  is  employed,  no  tax  can  be  legally  levied. 
Opinion  No.  89. 


A    PRIVATE    CUSTOM    MAY    BE    ESTABLISHED    TO 
SUPERSEDE  A  GENERAL  CUSTOM. 

It  seems  to  be  a  generally  accepted  custom  in  the  lumber  trade 
that  using  a  shipment  of  lumber,  even  though  there  be  a  dispute 
regarding  the  grade,  constitutes  an  acceptance  of  the  shipment  as 
invoiced  unless  the  shipper  has  authorized  the  purchaser  to  use  a 
part  or  all  of  the  lumber  in  dispute.  Our  Legal  Department  has  re- 
ceived some  claims  for  members  on  disputed  shipments  where,  from 


76 

an  examination  of  the  correspondence,  it  appeared  the  member  had 
a  valid  claim  for  the  full  amount  of  the  invoice.  After  negotiations 
with  the  buyers  it  developed  that  in  past  transactions  allowances 
were  made  on  several  shipments  where  the  grade  was  in  dispute, 
after  the  lumber  had  been  used.  We  have  had  occasion  to  go  into 
such  matters  with  our  attorneys  and  the  latter  are  of  the  opinion 
that  where  a  sufficient  number  of  adjustments  have  been  made 
on  such  a  basis,  practically  acquiescing  in  the  buyers  using  a  part 
of  the  lumber,  would  prejudice  a  claim  on  a  subsequent  shipment 
where  the  shipper  attempted  to  take  advantage  of  his  right  of  recov- 
ery. Frequently  disputed  claims  of  this  character  are  small  and 
have  to  be  tried  before  a  local  jury  and  our  attorneys  have  stated 
that  the  custom  of  having  made  allowances  in  the  past  after  lumber 
was  used  would  have  some  bearing  with  a  jury  on  a  subsequent 
deal,  and  possibly  be  construed  by  the  court  as  a  private  custom 
apart  from  the  general  trade  custom. 
Opinion  No.  90. 


AN  ORDER  MAY  BE  CANCELED  ONLY  WHEN  BUYER 
BECOMES  INSOLVENT. 

Question. — A  buyer  places  an  order  with  a  mill  for  five  cars  of 
lumber,  deliveries  to  be  one  car  a  month.  At  the  time  of  the  pur- 
chase the  buyer  is  in  good  financial  standing  and  signed  copies  of  the 
contract  are  exchanged  between  the  buyer  and  seller.  After  three 
deliveries  have  been  made  information  reaches  the  seller  that  the 
financial  standing  of  the  buyer  has  changed  for  the  worse;  that  is, 
he  has  committed  no  act  of  bankruptcy,  but  a  commercial  agency 
has  reduced  his  capital  and  credit  rating.  The  seller  requests  the 
buyer  to  anticipate  the  payment  of  some  of  the  previous  shipments 
before  he  will  agree  to  make  further  shipments.  The  buyer  refuses 
to  comply  with  this  request  and  asks  for  the  delivery  of  the  balance. 
The  seller  thereupon  makes  no  further  deliveries,  but  when  the  bills 
for  the  goods  delivered  become  due,  demands  payment.  The  buyer 
refuses  on  the  ground  that  the  seller  has  not  carried  out  his  part  of 
the  contract.  On  these  facts  please  tell  us  what  the  law  in  this  case 
would  be. 

Reply:  One  who  has  sold  goods  on  credit  is  not  justified 
in  refusing  delivery  simply  because  the  buyer's  financial 
standing  changes  for  the  worse  between  the  time  of  sale  and 
the  time  of  delivery.  In  the  case  here  put,  for  example,  there 
is  nothing  to  show  that  the  buyer  is  not  now  amply  able  to 
pay  for  the  goods,  or  that  the  contract  would  have  been 
declined  by  the  seller  if  the  buyer's  rating  at  the  time  had  been 


76 

what  it  is  now.  The  seller  is  entitled  to  refuse  delivery  only 
if  the  buyer,  before  delivery  is  made,  commits  any  act  of 
insolvency.  He  need  not  become  a  bankrupt  or  make  an 
assignment  for  creditors.  He  is  insolvent,  within  the  mean- 
ing of  this  rule,  if  he  fails  to  pay  any  just  and  admittedly 
proper  debt  promptly  upon  its  due  date.  As  long  as  he  is 
paying  his  bills  whenever  they  fall  due  the  seller  has  no 
ground  upon  which  to  declare  that  he  is  not  "keeping  his 
credit  good,"  if  the  buyer  in  this  case  is  not  solvent,  as  the 
word  is  here  denned,  the  seller  need  not  continue  the  deliver- 
ies. If  the  buyer  is  solvent  the  seller  is  not  justified  in  his 
position.  In  that  case  the  buyer  need  not  pay  for  the1  goods 
already  delivered  until  the  time  named  in  the  contract  for 
payment  arrives,  and  he  has  a  valid  claim  for  damages  arising 
out  of  the  seller's  failure  to  make  the  other  deliveries  in 
strict  accordance  with  the  contract. 
Opinion  No.  91. 


A  BUYER  HAS  A  CLAIM  WHEN  HE  ACCEPTS  A  DRAFT 
ON  INFERIOR  LUMBER. 

Question. — We  bought  a  car  of  lumber  through  a  broker.  Terms 
were :  Sight  draft  with  bill  of  lading  attached  for  three-fourths  of 
the  amount  of  the  invoice,  the  balance  to  be  paid  on  arrival  and 
inspection.  We  accepted  the  draft  on  presentation  and  when  the  car 
arrived  we  instructed  our  truckmen  to  draw  the  lumber  in.  Upon 
examination  we  found  that  it  was  all  more  or  less  below  grade. 
We  wired  shippers  accordingly  and  asked  for  instructions.  We  also 
wrote  them  a  letter  to  the  above  effect  and  told  them  that  we  could 
not  use  the  lumber  and  that  we  would  hold  it  for  their  instructions. 
Do  we  need  to  keep  the  shipment?  Can  we  compel  sellers  to  return 
us  the  amount  of  the  draft  and  freight  charges? 

Reply:  The  buyers  are  not  bound  to  accept  any  lumber 
not  in  accordance  with  the  order.  They  have  a  valid  claim 
against  the  sellers  for  the  amount  already  paid  towards  the 
purchase  of  the  goods,  for  the  amount  expended  for  freight 
and  for  any  other  useless  expense  to  which  the  buyers  were 
put  as  a  result  of  the  sellers'  failure  to  do  their  contract 
duty.  The  buyers  also  have  a  claim  for  damages,  if  any, 
caused  by  the  breach  of  contract  on  the  part  of  the  sellers. 
The  latter  were  bound  to  supply  lumber  regularly  sold  and 
accepted  by  the  trade  under  the  terms  covering  the  grade  in 
question,  and  their  failure  so  to  do  was  an  actionable  breach 
of  contract. 
Opinion  No.  92. 


77 

CONTRACT  OF  SALE. 

Delivery  by  Installments — Successive  Recoveries  by  the  Vendee 

Not  Permissible. 

When  a  party  contracts  to  deliver  goods  by  installments,  for 
example — Several  carloads  of  lumber  to  be  shipped  at  different 
intervals  but  fails  to  deliver  one  or  more  of  such  installments,  the 
vendee  may  repudiate  the  contract  and  sue  for  damages.  If  he  brings 
the  action  prior  to  the  time  for  the  delivery  of  the  last  installments, 
he  can  only  recover  for  such  installments  as  are  past  due  and  such 
recovery  bars  him  from  afterwards  bringing  an  action  and  recover- 
ing thereon  for  the  remaining  installments  or  deliveries. 

Opinion  No.  93. 


DUTY  OF  VENDOR  TO  MINIMIZE  LOSS  WHEN 
VENDEE  REFUSES  TO  ACCEPT  GOODS. 

It  occasionally  happens  that  a  purchaser  of  a  car  of  lumber 
refuses  to  accept  same  and  leaves  it  at  the  mercy  of  the  railroad  com- 
pany or  common  carrier.  In  this  way  demurrage  piles  up  and  other 
loss  may  arise  and  the  shipper  hesitating,  for  fear  of  compromising 
himself,  refuses  to  do  anything  with  the  lumber  on  his  part.  This 
is  generally  a  mistake  because  it  is  the  duty  of  the  shipper  to  make 
the  loss,  if  any,  as  small  as  possible  and  it  is  always  safe  to  first 
notify  the  vendee,  who  has  refused  to  receive  the  goods  that  he,  the 
shipper,  will  endeavor  to  dispose  of  them  in  the  best  possible  man- 
ner and  hold  the  vendee  responsible  for  any  loss  or  damage  thereby. 
In  this  case  he  may  have  to  have  the  goods  sold  elsewhere  or 
returned  to  him,  and  it  is  always  advisable  to  endeavor  to  have 
them  inspected  by  two  or  three  competent  parties  in  order  to  estab- 
lish the  market  value  and  to  ascertain  that  the  defects,  if  any, 
claimed  by  the  vendee,  do  not  exist. 
Opinion  No.  94. 

ACCORD  AND  SATISFACTION. 

If  a  buyer  of  lumber,  disputing  the  quantity  or  quality,  sends  a 
check  for  an  amount  less  than  the  invoice  to  the  seller,  does  the 
seller  in  accepting  the  same  preclude  himself  from  recovering  the 
balance  of  the  account?  This  situation  occurs,  we  believe,  often  in 
lumber  circles  and  very  frequently  the  remittance  is  accompanied  by 


78 

a  letter  or  some  notice  written  on  the  check  to  the  effect  that  it  is 
sent  as  a  settlement  in  full  and  some  go  so  far  as  to  add  that  if 
accepted  by  the  creditor  it  must  be  at  his  peril  so  far  as  the  remainder 
of  the  invoice  or  account  is  concerned.  The  law  on  this  point  is 
generally  similar  to  that  of  the  State  of  New  York  wherein  it  is  well 
settled  that  the  acceptance  or  use  of  such  a  remittance  does  not  stop 
or  prevent  the  creditor  from  recovering  the  balance  of  the  debt 
from  its  debtor  unless  there  has  been  an  honest  dispute  as  to  the 
amount  of  indebtedness  or  the  existence  of  any  indebtedness  at  all. 
This  is  what  is  termed  an  unliquidated  account  or  claim  and  in  such 
a  case,  when  one  tenders  an  amount  to  be  accepted  in  full  or  rejected 
and  the  other  accepts  the  remittance,  it  is  a  complete  accord  and 
satisfaction.  The  rule  is  different  when  the  amount  or  debt  is  cer- 
tain and  there  is  only  a  dispute  between  the  parties  concerning 
questions  of  shortage,  quality,  etc.  This  is  what  is  termed  a  liqui- 
dated claim  and  the  acceptance  of  a  remittance  to  be  a  full  settle- 
ment does  not  preclude  the  creditor  from  using  the  remittance,  cred- 
iting the  same  to  the  account  of  the  debtor  and  suing  for  the  balance. 
Opinion  No.  95. 

CANCELLING    AN    ORDER    BEFORE    SHIPMENT- 
EFFECT  OF  SAME. 

Many  lumbermen  take  orders  from  their  customers  through 
traveling  men  or  other  representatives.  Usually  the  orders  are  writ- 
ten down  in  a  manifold  book  and  often  are  signed  by  the  buyer. 
The  order  is  usually  taken  subject  to  confirmation  by  the  house  or 
home  office.  This  acceptance  or  confirmation  is  customarily  made 
by  acknowledgement  of  the  order  in  writing  to  the  purchaser.  The 
question  in  point  is  whether  or  not,  if  an  agent  has  taken  an  order 
as  above,  can  the  purchaser  cancel  the  order  and  his  obligation  to 
accept  the  lumber  ?  In  a  case  in  this  State  a  purchaser  of  merchan- 
dise placed  the  order  with  the  traveling  man  and  later  wrote  to  the 
house  cancelling  the  same,  as  he  found  he  could  buy  similar  goods 
for  less  money.  The  purchaser  wrote  before  the  seller  had  com- 
municated any  acceptance  or  intention  to  fill  the  order  which  had 
been  given  to  the  seller's  representative.  Some  correspondence 
ensued  in  which  the  seller  refused  to  cancel  the  order  and  later 
shipped  the  goods  to  the  purchaser,  who  refused  to  receive  them. 
The  action  resulted  in  a  judgment  in  favor  of  the  seller,  which  was 
reversed  on  appeal,  in  which  numerous  authorities  were  cited  by  the 


79 

Appellate  Court  holding  substantially  as  follows — "An  order  or 
request  in  writing,  addressed  to  a  dealer  or  his  agent  to  ship  to  the 
writer  on  or  before  a  date  named,  goods  of  a  kind  specified,  for 
which  the  writer  agreed  to  pay  a  price  named,  does  not  constitute  a 
contract  until  accepted  or  acted  upon  by  the  vendor  and  may  be 
withdrawn  at  any  time  before  acceptance." 

It  is  obvious  that  the  result  would  be  different  were  the  vendor 
to  have  signified  his  acceptance  of  the  order  prior  to  the  cancelling 
or  withdrawal  of  same  by  the  purchaser,  as  we  would  then  have  a 
valid  contract,  which  could  not  be  cancelled  without  mutual  agree- 
ment. 

In  this  connection  it  might  be  well  to  add  that  in  business  trans- 
acted by  mail,  the  general  rule  is  that  the  time  of  the  mailing  or 
depositing  in  the  mail  of  a  letter  is  the  presumptive  time  of  the  com- 
municating of  the  facts  therein  to  the  party  to  whom  the  letter  is 
addressed,  hence  when  an  order  is  sent  by  mail,  another  letter  with- 
drawing the  order,  if  mailed  prior  to  the  mailing  of  the  acceptance 
by  the  other  party,  is  a  complete  cancellation  of  the  order  in  the 
first  letter.  In  other  words,  the  law  does  not  take  into  account  the 
periods  elapsing  by  reason  of  the  means  of  communication  but  only 
the  acts  of  the  parties  in  so  far  as  the  time  of  such  acts  is  consid- 
ered to  have  taken  place. 
Opinion  No.  96. 

DISCHARGE  IN  BANKRUPTCY— WHAT  WILL 
PREVENT. 

Under  the  amendment  to  the  National  Bankruptcy  Law  as 
amended  in  February,  1903,  the  rules  relating  to  discharge  of  bank- 
rupts, are  somewhat  changed.  Many  parties  are  interested  ofttimes 
in  preventing  the  discharge  of  a  bankrupt  for  no  other  reason  than 
that  they  are  creditors  who  believe  that  the  bankrupt  has  not  been 
honest  in  his  dealings  and  irrespective  of  motives  of  personal  enmity 
feel  that  the  welfare  of  the  business  community  is  served  by  pre- 
venting the  bankrupt  from  being  discharged  and  re-entering  into 
business.  Probably  the  act  that  will  prevent  a  discharge  that  most 
often  appeals  to  the  creditor  is  that  the  bankrupt  obtained  goods  on 
a  false  statement  in  writing.  This,  if  shown,  will  prevent  the  dis- 
charge, the  law  reading  in  this  respect,  as  follows :  "Obtained 
property  on  credit  from  any  person  upon  materially  false  statement 


80 

in  writing  made  to  such  person  for  the  purpose  of  obtaining  such 
property  on  credit."  It  is  obvious  that  the  party  who  urges  this 
objection  must  be  the  one  who  has  been  injured  thereby. 

Other  debts  not  dischargeable  in  bankruptcy  are  taxes  levied  by 
the  United  States,  the  State,  county,  district  or  municipality  in 
which  bankrupt  resides,  and  others  of  no  practical  interest  to  mer- 
chants. In  addition  to  the  above  are  those  debts  which  have  not  been 
duly  scheduled  by  the  bankrupt  in  the  proceeding  in  time  for  proof 
and  allowance,  with  the  name  of  the  creditor  if  known  to  the  bank- 
rupt, unless  such  creditor  had  notice  or  actual  knowledge  of  the 
proceedings  in  bankruptcy;  or  were  created  by  his  fraud,  embezzle- 
ment, misappropriation,  or  defalcation,  while  acting  as  an  officer  or 
in  any  fiduciary  capacity. 
Opinion  No.  97. 


SALES— OF  AN  INDEFINITE  QUANTITY. 

A  purchaser  of  a  quantity  of  merchandise  ordered  by  letter  two 
hundred  to  three  hundred  tons  of  a  certain  article  to  be  delivered 
within  the  following  six  months  as  wanted.  The  vendor  duly 
acknowledged  receipt  of  the  order  and  accepted  same,  stating  that 
they  would  deliver  a  certain  quantity  in  the  immediate  future  and 
balance  as  ordered  within  the  following  six  months.  Thereafter, 
the  vendor  delivered  a  certain  portion  of  the  merchandise  for  which 
it  was  paid  with  the  exception  of  one  installment,  which  the  vendee 
refused  to  pay  for  alleging  that  the  vendor  had  refused  to  deliver 
further  installments.  The  purchaser  sued  the  vendor  for  damages 
for  breach  of  contract  in  failing  to  deliver  the  balance  of  the  con- 
tract. The  Court  held  that  by  the  terms  of  the  order  the  vendor 
could  not  insist  on  the  purchaser  taking  more  than  the  two  hundred 
tons  but  the  purchaser  on  his  part  could  insist  within  the  six  months 
period  upon  the  vendor  delivering  the  remaining  hundred  tons,  it 
appearing  that  two  hundred  tons  had  been  already  delivered.  In 
fact,  it  was  an  option  which  the  vendee  could  enforce  but  not  the 
vendor. 

The  above  is  a  brief  outline  of  an  action  decided  in  the  Appellate 
Court  in  New  York  and  applies  as  well  to  an  executory  sale  of 
lumber,  many  similar  orders  being  placed  among  lumbermen. 
Opinion  No.  98. 


81 

LIABILITY  OF  BANK  FOR  FAILURE  TO  GIVE  NOTICE 

OF  PROTEST  TO  ENDORSER  UPON  NOTE 

RECEIVED  FOR  COLLECTION. 

That  it  is  the  legal  obligation  of  a  bank,  which  receives  a  note  for 
collection  to  use  all  diligence  to  give  notice  of  its  dishonor  to  all 
endorsers  is  set  forth  in  a  decision  of  the  Appellate  Division  of  the 
New  York  Supreme  Court  (Howard  vs.  Bank  of  Metropolis,  95 
App.  Div.  342). 

One  H.,  who  was  the  owner  of  a  promissory  note  made  by  one  S., 
and  endorsed  by  G.,  delivered  the  note  to  a  bank  for  collection  and 
left  with  it  a  card  giving  G.'s  full  name  and  address,  stating  that  he 
wished  the  note  carefully  protested  as  he  expected  to  hold  the 
endorser,  the  maker  not  being  responsible,  and  that  he  would  not 
be  in  the  city  when  the  note  fell  due.  The  maker  of  the  note  having 
failed  to  pay  it  when  due,  the  bank  sent  it  to  its  Notary  for  protest, 
but  failed  to  deliver  to  the  Notary  the  card  bearing  the  name  and 
address  of  the  endorser,  and  informed  the  Notary  that  the  endorser's 
address  was  unknown.  The  Notary  made  out  two  notices  of  pro- 
test, one  directed  to  H.  and  the  other  to  G.  Both  notices  were  placed 
in  an  envelope  and  sent  to  H.,  who  did  not  receive  them,  being  out 
of  town. 

The  Court  held  the  bank  responsible  and  in  rendering  its  opin- 
ion referred  to  a  prior  New  York  case  entitled  First  National  Bank 
vs.  Fourth  National  Bank  (77  N.  Y.  320)  and  quoted  "it  is  the  duty 
of  an  agent  who  receives  negotiable  paper  for  collection,  in  case  such 
paper  is  not  paid,  so  to  act  as  to  secure  and  preserve  the  liability 
thereon  of  all  the  parties  prior  to  his  principal,  and  if  he  fails  in  this 
duty  and  thereby  causes  loss  to  his  principal,  he  becomes  liable  for 
such  loss." 
Opinion  No.  99. 


ACCOUNTS  STATED. 

The  Settlement  of  Accounts  and  Striking  of  a  Balance  Between 
Parties — What  It  Consists  Of. 

Upon  merchandise  accounts  which  embrace  many  items  or  cover 
transactions  running  through  a  long  period  it  is  often  wise  to 
strike  a  balance  or  to  bring  about  an  agreement  between  the  creditor 
and  debtor  as  to  the  exact  amount  owing  thereon.  The  value  of  such 


arrangement  becomes  of  great  moment  when  at  a  later  date  attempt 
is  made  to  enforce  collection  of  the  account.  It  obviates  the  neces- 
sity proving  various  material  matters  such  as  the  delivery  of  the 
various  items  charged  to  the  debtor ;  that  they  were  accepted  by  the 
debtor ;  that  they  were  of  the  kind  called  for  by  the  contract  of  sale ; 
that  there  was  a  full  number  or  count ;  that  the  agreed  prices  were  as 
charged.  The  fixing  of  a  balance  upon  a  running  account  is  legally 
known  as  the  stating  of  an  account  and  an  account  so  fixed  is  an 
"account  stated." 

A  running  account  becomes  an  "account  stated"  by  agreement 
either  express,  or  implied  by  acquiesence,  between  the  parties,  that 
a  definite  amount  or  sum  is  owing  from  one  to  the  other.  No  par- 
ticular form  of  words  is  essential  and  neither  must  it  be  in  writing, 
although  a  written  expression  is  of  more  ready  proof  and,  there- 
fore, preferable.  An  express  admission,  either  verbally  or  by  letter, 
of  the  correctness  of  an  account  constitutes  an  account  stated. — 
(Vernon  v.  Simmons,  7  N.  Y.  Supp.  649.) 

In  the  above  case  the  debtor  retained  accounts  received  from  his 
creditor  without  objection  or  replying  and  subsequently  acknowl- 
edged orally  the  receipt  of  the  letter  containing  them  and  promising 
to  pay  later  on,  and  it  was  held  that  the  creditor  could  sue  upon  an 
account  stated.  It  is  not  necessary  that  the  account  should  be 
signed  by  the  parties  to  make  it  an  account  stated.  It  is  enough 
that  it  has  been  examined  and  accepted  by  the  party  and  this  accept- 
ance need  not  be  expressed ;  it  may  be  implied  from  circumstances 
such  as  keeping  it  without  objection  beyond  a  reasonable  time.  As 
to  what  is  an  unreasonable  time  depends  on  circumstances  largely 
and  it  has  been  held  that  two  months  was  sufficient,  although  gen- 
erally a  longer  time  would  be  more  conclusive.  This  acquiesence, 
however,  may  be  explained  by  the  debtor,  which  would  nullify  the 
apparent  acceptance,  but  without  such  satisfactory  explanation  the 
situation  is  prima  facie  against  him.  Where  the  indebtedness  has 
been  expressly  denied,  the  retention  of  the  account  does  not  bind  the 
debtor. — (Austin  v.  Wilson,  n  N.  Y.  Supp,  565.) 

In  bringing  an  action  on  an  account  stated  if  the  plaintiff  is 
defeated  through  failure  to  prove  the  agreement  as  to  the  amount 
or  the  fact  that  an  "account  was  stated;"  he  would  not  be  debarred 
from  bringing  another  action  to  recover  for  the  various  items  com- 
prising the  account. 
Opinion  No.  101. 


ACCEPTANCE    OF    GOODS— WHEN    SUFFICIENT    TO 
BIND  PURCHASER. 

It  is  a  daily  occurrence  in  the  lumber  trade  that  a  purchaser 
finds  some  objection  to  the  quality  or  quantity  of  lumber  shipped  to 
him  on  order.  Frequently  in  such  case,  without  any  communication 
with  the  shipper  a  purchaser  feels  warranted  in  using  such  portion 
of  the  lumber  as  suits  him,  relying  on  an  assumed  right  to  lay  aside 
the  balance  for  the  account  of  the  shipper,  with  the  idea  that  he 
may  reject  it  entirely  or  obtain  some  reduction  in  the  price.  The 
general  rule  laid  down  by  the  courts  in  cases  of  this  sort  is  as  fol- 
lows :  Where  the  vendee  of  goods,  purchased  without  warranty, 
after  full  opportunity  for  an  inspection,  accepts  them  without  objec- 
tion when  delivered,  he  cannot,  in  an  action  against  him  to  recover 
the  price  defend  upon  the  ground  that  they  did  not  conform  to  the 
contract  of  sale. — (Smith  vs.  Coe,  170  N.  Y.  162.) 

If  the  purchaser,  upon  the  receipt  of  the  goods,  makes  objection 
to  the  quality,  but,  without  the  express  permission  of  the  seller, 
uses  a  portion,  it  is  held  that  by  so  doing  he  tacitly  waives  his  objec- 
tion and  his  acts  amount  to  an  acceptance  of  the  entire  lot. — (Coplay 
Iron  Co.  vs.  Pope,  108  N.  Y.  Appeals,  232.) 

In  the  above  case,  which  involved  a  transaction  in  pig  iron,  the 
purchaser  complained  of  the  shipment  and  upon  being  sued  for  the 
purchase  price  set  up  a  claim  for  damages  by  reason  of  the  alleged 
defective  quality  and  it  was  held  "where  after  discovery  or  oppor- 
tunity to  discover  any  defect  in  goods  delivered  under  an  executary 
contract  of  sale,  the  vendee  neither  returns  or  offers  to  return  the 
property  nor  gives  the  vendor  notice  or  opportunity  to  take  it  back, 
in  the  absence  of  a  collateral  warranty  or  agreement  as  to  quality, 
he  is  conclusively  presumed  to  have  acquiesced  and  may  not  there- 
after complain  of  the  inferior  quality." 

When  a  car  constitutes  but  a  portion  of  the  order,  which  was  in 
the  nature  of  one  contract  for  a  number  of  cars,  the  purchaser  can- 
not object  to  the  quality  and  retain  the  initial  car  and  decline  to 
receive  the  balance  of  the  shipment.  The  contract  of  sale  being  an 
indivisible  one  in  law,  the  purchaser  by  his  acceptance  of  the  initial 
shipment  and  failure  to  return  it,  is  conclusively  presumed  to  have 
acquiesced  in  the  quality  of  the  lumber  offered  him  and  waived  any 
objection  to  the  remainder  of  the  shipment  order  provided  it  is  the 
same  as  the  first 'car. 


84 

In  the  case  of  Weil  vs.  The  Unique  Electric  Device  Co.,  Reported 
in  39  Misc.  (New  York  1902),  page  527,  a  vendor  sought  to  recover 
the  stipulated  purchase  price  of  certain  merchandise  sold  to  the 
defendant,  consisting  of  some  3,000  electric  batteries,  of  which  1,000 
were  delivered  and  paid  for,  but  the  purchaser  refused  to  accept  the 
balance  on  the  ground  that  the  quality  was  not  according  to  the 
agreement.  The  court  held  that  the  contract  of  sale  was  an  entire 
one  and  it  was  the  duty  of  the  purchaser  to  receive  balance  of  the 
order,  provided  they  were  of  similar  quality  to  the  lot  already  deliv- 
ered. That  when  the  purchaser  received  the  first  lot  and  found  them 
unsatisfactory,  it  was  its  duty  to  rescind  the  sale  and  return,  or  offer 
to  return  the  goods ;  and  its  failure  so  to  do  was  an  acquiesence  on 
its  part  of  the  quality  of  the  goods  in  question. 

The  above  discussion  leaves  for  further  consideration  the  ques- 
tion when  a  purchaser  though  bound  to  take  goods  and  chargeable 
with  their  full  price,  may  hold  the  seller  liable  for  damages  for 
breach  of  express  or  implicit  warranty. 
Opinion  No.  102. 

CONTRACT  OF  SALE— STATING  ESTIMATES  OF  MAX- 
IMUM AND  MINIMUM  AMOUNT. 

It  is  the  custom  of  many  merchants,  with  a  view  doubtless  of 
securing  the  best  possible  terms  and  yet  to  leave  a  loophole,  whereby 
they  can  take  only  such  an  amount  as  they  desire,  to  give  the  vendor 
a  general  idea  of  their  requirements. 

In  Heisel  vs.  Volkman,  reported  in  Volume  55,  New  York 
Appellate  Division,  page  607,  a  dealer  wrote  to  a  manufacturer  of 
certain  kinds  of  merchandise  asking  for  "prices  for  supplying  our 
requirements,"  stating  "we  estimate  our  yearly  requirements  at  from 
five  to  ten  million  pieces.  Are  confident  that  they  will  not  be  less 
than  the  smaller  amount  and  reasonably  certain  that  they  will  come 
up  to  or  exceed  the  larger  one,"  to  which  the  manufacturer  replied, 
"I  would  be  willing  to  make  a  yearly  contract  with  you  from  five  to 
ten  million  pieces,  etc."  The  purchaser  did  not  take  the  minimum 
amount  of  five  million  pieces  during  the  period  in  question  and  the 
manufacturer  sued  to  recover  the  purchase  price  of  the  difference, 
having,  of  course,  done  what  was  necessary  in  respect  to  making  a 
tender  of  delivery.  The  court  held  that  the  purchaser  was  obli- 
gated to  take  and  pay  for  at  least  five  million  pieces,  even  if  his 
requirements  for  the  year  fell  substantially  short  of  that  amount 


85 

and  that  the  seller  in  making  his  price  had  a  right  to  rely  upon  the 
minimum  amount  stated  by  the  buyer. 

Attention  is  called  to  this  for  the  reason  that  the  same  rule 
would  apply  to  a  transaction  in  lumber  and  because  many  of  the 
trade  are  in  the  habit  of  making  contracts  upon  similar  conditions 
and  referring  in  elastic  terms  to  their  probable  requirements. 
Opinion  No.  103. 

CERTIFICATION  OF  CHECK— RELEASES  THE  MAKER. 

Attention  is  called  to  the  fact  that  under  the  law  of  New  York 
State  the  procuring  of  the  certification  of  a  check  by  the  holder  from 
the  bank  or  banker  upon  which  it  is  drawn  is  equivalent  to  the 
acceptance  of  a  bill  of  exchange  and  releases  the  drawer. — (Meurer 
vs.  Phoenix  National  Bank,  94  App.  Div.  (N.  Y.)  331.) 
Opinion  No.  104. 

SALES— STOPPAGE  IN  TRANSIT. 

The  right  to  stop  a  shipment  in  transit  is  based  on  the  existence 
of  a  lien  in  favor  of  the  seller,  which  continues  until  the  goods  have 
reached  the  actual  physical  possession  of  the  buyer.  So  long  as  the 
goods  are  in  the  hands  of  a  carrier  the  seller  may,  given  the  proper 
conditions,  reclaim  the  goods.  This  is  so  even  if  the  carrier  is  one 
designated  or  selected  by  the  purchaser.  A  fraudulent  sale  of  ths 
goods  by  the  purchaser  to  third  parties  will  not  defeat  the  right  of 
stoppage,  nor  will  seizure  under  attachment  or  execution  issued 
against  the  purchaser  provided  the  right  is  exercised  before  the 
transit  is  at  an  end. 
Opinion  No.  105. 

FOREIGN    CORPORATION    LAWS. 

Necessity  of  Filing  Certificates,  Etc.,  in  West  Virginia,  Indiana, 

Tennessee,   Mississippi,   Kentucky,   Ohio, 

Michigan,  New  York. 

One  of  our  members  recently  had  an  attorney  examine  the  cor- 
poration laws  of  several  States  and  give  an  opinion  concerning 
the  advisability  of  filing  corporate  certificates,  securing  so-called 
licenses,  etc.,  in  the  various  States  wherever  the  member  was  making 


86 

sales.  The  States  referred  to  are  West  Virginia,  Indiana,  Tennessee, 
Mississippi,  Kentucky,  Ohio,  Michigan  and  New  York.  This  infor- 
mation may  be  helpful  to  other  members,  and  a  copy  of  the  opinion 
follows : 

WEST  VIRGINIA. — Every  corporation  whose  principal 
place  of  business  is  located  out  of  the  State  must  pay  an 
annual  license  tax  as  follows:  If  the  authorized  capital  is 
not  more  than  $25,000,  $20;  not  more  than  $100,000,  $50; 
not  more  than  $1,000,000,  $50;  an  additional  forty  cents  on 
each  $1,000  in  excess  of  $100,000.  No  other  taxes  are  assessed 
unless  it  has  personal  or  real  estate  in  West  Virginia.  Such 
foreign  corporations  may  be  authorized  to  hold  property  and 
do  business  in  the  State  by  certificate  of  the  Secretary  of  the 
State  that  they  have  filed  with  him  a  copy  of  their  articles  of 
association,  which  certificate  with  a  copy  of  the  charter  must 
be  filed  with  and  the  certificate  recorded  by,  the  Clerk  of  the 
County  Court  of  such  county  in  which  their  business  is  con- 
ducted. A  foreign  corporation  obtaining  the  above  mentioned 
certificate  authorizing  to  hold  property  and  do  business  in 
West  Virginia  has  the  powers,  rights  and  privileges  and  is 
subject  to  the  same  regulations,  restrictions  and  liabilities  that 
are  conferred  by  statutes  of  West  Virginia  on  domestic 
corporations. 

Every  foreign  corporation  which  shall  do  business  in  the 
State  without  having  obtained  such  certificate  and  having  it 
filed  and  recorded  according  to  law  shall  be  guilty  of  misde- 
meanor, and  upon  conviction  shall  be  fined  not  less  than  $50, 
nor  more  than  $1,000  for  each  month  its  failure  so  to  comply 
shall  continue. 

INDIANA. — Every  foreign  corporation,  except  railroad  and 
telegraph  companies,  built  before  March  15,  1901,  and  insur- 
ance companies  must  maintain  a  public  business  office  in 
Indiana  and  must  designate  a  representative  in  Indiana  on 
whom  service  of  process  may  be  had.  Such  foreign  cor- 
porations are  subject  to  the  liabilities,  restrictions  and  duties 
imposed  upon  domestic  corporations.  They  must  before  being 
permitted  to  do  business  in  Indiana  file  in  the  office  of  the 
Secretary  of  State  certified  copy  of  its  articles  of  incorpora- 
tion, and  a  statement  sworn  to  by  the  principal  or  agent  in 
Indiana  of  the  proportion  of  the  capital  stock  of  such  cor- 
poration represented  by  its  property  located  and  business 
transacted  in  Indiana,  and  must  pay  in  the  office  of  the  Secre- 
tary of  State  upon  such  proportion  incorporation  fees  equal 
to  those  required  of  domestic  corporations.  The  Secretary  of 
State  shall  then  issue  a  certificate  authorizing  such  corpora- 
tion to  do  business.  Until  this  law  is  complied  with,  demands 
of  a  foreign  corporation,  whether  arising  out  of  contract  or 


87 

tort,  cannot  be  enforced  in  the  courts  of  Indiana,  and  such 
corporation  is  subject  to  a  fine  of  not  less  than  $1,000.  Fee 
for  filing  articles  of  incorporation  of  a  corporation  with  capi- 
tal stock  of  $10,000  or  under  is  $10,  over  $10,000,  one-tenth 
of  one  per  cent,  upon  authorized  capital.  No  annual  State  tax 
on  corporation  as  such. 

TENNESSEE. — Foreign  corporations  must  file  in  the  office 
of  the  Secretary  of  State  a  copy  of  its  charter  and  cause  an 
abstract  of  same  to  be  recorded  in  the  office  of  the  Register  of 
each  county  in  which  such  corporation  purposes  to  carry  on 
its  business  or  to  acquire  and  own  property.  Penalty  for 
failure  to  do  so  shall  subject  the  offender  to  a  fine  of  not  less 
than  $100  nor  more  than  $500.  They  must  pay  in  the  office  of 
the  Secretary  of  State  a  tax  or  license  of  $100  to  exercise 
such  privilege. 

MISSISSIPPI. — Foreign  corporations  may  sue  and  be  sued 
and  are  liable  to  be  proceeded  against  by  attachment  or  other- 
wise, as  individual  non-residents  are  liable.  The  acts  of  their 
agents  shall  have  the  same  force  as  the  acts  of  agents  of 
private  persons  within  the  scope  of  their  power.  They  cannot 
recover  on  any  contract  made  in  the  State  or  cause  action 
originating  therein  which  is  in  violation  of  laws  or  policies  of 
States.  No  general  statutes  about  taxation  of  foreign  cor- 
porations. Subject  governed  in  main  by  common  rule  as  to 
taxes,  but  they  are  required  to  file  with  the  Secretary  of  State 
certified  copy  of  their  charter  for  record,  for  which  a  gradu- 
ated fee  is  fixed. 

KENTUCKY. — If  the  corporation  be  organized  under  the 
laws  of  another  State  a  board  shall  fix  the  value  of  the  capital 
stock  determined  from  the  amount  of  the  gross  receipts  of  the 
corporation  in  Kentucky  and  elsewhere  the  proportion  which 
the  gross  receipts  in  Kentucky  bear  to  the  entire  gross  receipts. 
The  same  proportion  of  the  value  of  the  entire  capital  stock, 
less  the  assessed  value  of  tangible  property  in  the  State,  shall 
be  the  correct  value  of  the  corporation  franchise  for  taxation. 
Reports  must  be  made  and  failure  is  a  misdemeanor  punish- 
able by  a  fine  of  $1,000  and  $50  for  each  day. 

OHIO. — Foreign  corporations  are  forbidden  to  do  business 
until  they  have  procured  from  the  Secretary  of  State  certifi- 
cate that  they  have  complied  with  the  requirements  of  law 
which  authorize  them  to  do  business  in  the  State,  and  until 
said  companies  shall  have  caused  the  proportion  of  their 
capital  stock  employed  within  the  State  to  be  determined  by 
the  Secretary  of  the  State,  and  shall  have  paid  to  him  a  fee  of 
one-tenth  of  one  per  cent,  upon  such  amount  and  obtained  his 
certificate  of  such  payment.  No  foreign  corporation  doing 
business  in  the  State  can  maintain  any  action  upon  any  con- 
tract made  by  it  in  the  State  until  it  has  procured  such  certifi- 


cate.  The  corporation  must  file  with  the  Secretary  of  State 
due  copy  of  its  charter  and  statement  under  seal  of  the 
amount  of  its  stock,  the  nature  of  its  business  and  state  which 
is  to  be  its  principal  place  of  business,  designating  a  person 
upon  whom  process  against  such  corporation  may  be  served. 
The  person  so  designated  must  have  an  office  where  the  cor- 
poration is  to  have  its  principal  place  of  business  within  the 
State.  Corporations  complying  with  these  requirements  are 
exempt  from  attachment  on  the  ground  that  they  are  foreign 
corporations. 

MICHIGAN. — Foreign  corporations  filing  in  the  office 
of  the  Secretary  of  State  certified  copy  of  articles  of  incor- 
poration and  an  appointment  of  an  agent  in  this  State  for 
service  of  processes  may  carry  on  their  business  in  Michigan. 
Foreign  corporations  may  bring  suits  on  furnishing  security 
for  costs. 

NEW  YORK. — No  foreign  corporation  shall  do  business 
without  first  procuring  from  the  Secretary  of  State  certificate 
that  it  has  complied  with  requirements  of  law.  License  fee 
shall  be  paid.  No  foreign  corporation  can  do  business  in  New 
York  or  sue  on  contract  made  there  unless  it  has  procured 
such  certificate  prior  to  the  making  of  the  contract.  Selling 
goods  through  a  factor  within  the  State'  is  not  covered  by 
this  prohibitive  clause.  Before  granting  such  certificate  for- 
eign corporation  must  file  with  Secretary  of  State  copy  of  its 
charter  and  a  statement  setting  forth  its  business,  its  princi- 
pal place  of  business  within  the  State  and  designating  the  per- 
son upon  whom  processes  may  be  served.  Such  person  must 
have  an  office  within  the  State,  where  the  principal  place  of 
business  of  such  corporation  is  located.  Foreign  corporations 
must  pay  to  State  Treasurer  a  license  fee  of  one-eighth  of  one 
per  cent,  for  privilege  of  exercising  its  corporate  franchise  in 
New  York,  to  be  computed  upon  the  amount  of  capital  stock 
employed  within  the  State  during  its  first  year  of  business. 
Opinion  No.  106. 


CONTRACTS    FOR    CARLOADS   SEPARABLE. 

Where  a  contract  was  made  for  three  carloads  of  a  company's 
No.  i  white  cedar  shingles  and  the  purchaser  accepted  and  paid  for 
two  carloads,  but  refused  to  accept  the  third  because  of  alleged  in- 
ferior grade  and  quality,  and  because  the  shingles  were  not  made  by 
said  company,  the  Supreme  Court  of  Minnesota  holds  that  the  con- 
tract as  to  the  three  carloads  was  separable,  so  that  the  purchaser's 
payment  and  the  seller's  acceptance  of  payment  for  two  carloads  did 


not  prevent  the  seller  from  beginning  an  action  to  recover  the  pur- 
chase price  of  the  third  carload  nor  the  purchaser  from  defending 
therein.  The  court  also  holds  that  a  buyer,  seeking  to  reject  an 
article  as  not  in  accordance  with  the  contract  of  sale,  must  do  nothing 
after  he  discovers  the  true  condition  inconsistent  with  the  seller's 
ownership  of  the  property. — Duluth  Log.  Co.  vs.  John  C.  Hill  Co., 
124  N.  W.,  967. 
Opinion  No.  107. 

WARRANTY  SURVIVES  ACCEPTANCE. 

Where  one  attempting  to  sell  shingles  stated  in  a  letter  that  "They 
are  mighty  good  shingles,  they  are  as  good  as  you  could  get  any- 
where," it  was  a  warranty  of  their  quality.  Where  a  buyer  of 
shingles  accepts  shingles  which  he  knows  are  of  a  grade  inferior  to 
what  the  seller  warranted,  the  buyer  does  not  waive  the  warranty, 
and  he  can  defend  against  an  action  for  the  price  on  that  ground. 
(Texas  Court  of  Civil  Appeals.)  Harroll  vs.  McDuffie,  128  S.  W. 
Rep.,  1149. 
Opinion  No.  108. 

ACCEPTANCE  OF  LESS  THAN  INVOICE  PRICE. 

On  arrival  of  a  carload  of  shingles,  the  buyer  complained  of  their 
quality,  and  for  the  purpose  of  securing  an  immediate  settlement  and 
avoiding  further  negotiations  the  seller  agreed  to  accept  a  less 
amount  for  them  than  the  full  price  if  payment  was  made  before  a 
specified  time.  The  buyer  failed  to  make  payment  within  such 
specified  time  and  in  a  suit  to  recover  for  the  full  amount  of  the 
invoice  it  was  held  by  the  court  that  the  seller  could  require  payment 
under  the  circumstances  of  the  full  price.  (Texas  Court  of  Civil 
Appeals.)  Harroll  vs.  McDuffie,  128  S.  W.  Rep.,  1149. 
Opinion  No.  109. 


JOHN  A.   PHILLIPS 

NEW    YORK 


A     000  687  306 


University 
Southe: 
Libra] 


